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It ain’t what you do…

The essence of what makes a great bank has not really changed in terms of the purpose they serve. Consumers have always wanted exemplary customer service, a wide selection of products and services, and a safe and secure environment that protects their hard-earned money. But what has changed irrevocably is the way in which these elements are delivered, a truth that incumbent banks can no longer afford to underestimate.  

The stats say it all

A recent US study by Cornerstone Advisors found that since 2020, digital banks/fintechs increased their share of all new accounts from 36% to 47%, while that of the megabanks fell from 24% to 17% and the regional banks from 27% to 21%. In the UK, neo banks Monzo, First Direct and Starling Bank regularly top customer satisfaction surveys by consumer watchdog gold standard Which? and others.  

The shift in market share is due in large part to neo banks’ innovative approach to digital banking and laser focus on customer experience. To their credit, some incumbents have recognised that this is what is making the difference. While their offerings are not the most cutting edge in the market, customer satisfaction ratings indicate that their apps have adopted many of the popular features developed by the leaders. 

Another point of note is JPMorgan’s neo bank, Chase UK. In the two years since its launch, it has already attracted more than 1.6 million customers and is now about to roll the concept out to Germany and other EU countries. But why is this the exception rather than the rule?

Burdens creating barriers

Established banks face several challenges hindering them from clawing market share back from their challenger counterparts. Costly compliance with regulatory change, maintenance of legacy technology that can consume up to 40% of an IT budget, and conservative cultures with layers upon layers of bureaucracy are some of the main factors slowing them down. These could also be the reasons that many traditional banks have typically committed several basic errors when they have made moves to modernise. 

Whether using their own or purchased solutions for their digital offering, too much time and effort has been spent ‘reinventing the wheel’ for basic functionalities, as many of them are readily available pre-built. Similarly, too much focus has been put on creating a specific feature, rather than equipping themselves to rapidly and continuously deliver at speed. What’s needed is a change in mindset.

…It’s the way that you do it

As high street empires continue to lose ground, the traditional names must ensure their digital offerings are competitive if they are to successfully survive and thrive in this new era. Specifically, focus needs to be on optimising mobile apps — the 2020s equivalent of the shop window. These are by far the best channels to introduce today’s customers to services and capabilities that may not even yet be aware they need. 

But incumbent banks have work to do in this area. Most of their apps are fine for managing current accounts but are lacking when it comes to tasks such as arranging a mortgage or managing investments. Newcomers like Nutmeg have set the standard for online portfolio investment management, and it is only a matter of time before Chase integrates Nutmeg seamlessly. Incumbents will need to swiftly integrate similar capabilities within their own apps to retain customers. How do they do this when they are contending with the challenges mentioned earlier?

Banks no longer have to choose a binary ‘buy’ or ‘build’ approach when developing competitive offerings. Modern composable technologies enable a more nuanced and hybrid approach, allowing financial institutions to use a combination of purchased accelerators, combined with their own unique capabilities created in-house. 

This allows a culture of continuous innovation that doesn’t break the bank – if anything this approach is more likely to do the opposite.




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Ben Goldin

Ben Goldin

Founder and CEO


Member since

08 Nov 2017



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This post is from a series of posts in the group:

Digital Bank Transformation

This is a blog group for all topics related to Digital Bank Transformation, from incumbents to start-ups, to Wholesale and Investment banking. Technology is advancing like never before...this is a group for ensuring best practice is celebrated and shared.

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