Adapting platforms, ecosystems, payments and data for the future, the banking business model has proven to be resilient to disruption. Tech trends Adapting the business model Essential building blocks A roadmap for adoption Call to action. Innovations that change the way value is offered to consumers threaten the integrity and resilience of the traditional banking model. New trends in financial service offerings such as embedded finance and decentralized finance threatens the integrity of the traditional banking business model.
For example, Nano Home Loans, a non-bank fintech lender established in , offers to approve home loans at highly competitive rates within ten minutes of an online application; this value proposition has resulted in faster-than-system growth rates. While fintech and innovators dismember the banking value chain, incumbents also face the very real threat of highly capitalized tech giants. Many with deep customer connections and loyalty, are stepping directly into financial services, potentially redefining the category.
For example, although Google has abandoned plans to launch Google Plex a transaction account for Google Pay , the proposition found strong consumer endorsement of innovative features that embedded financial services into everyday lifestyle choices.
Finally, regulators are deliberately adjusting their posture to help increase competition e. Consequently, banks are and should be exploring alternative business models to deepen their value pools, entrench customer relationships and expand their value propositions. As banks evolve their market role, they will likely also need to adapt their business models. Many of the innovations that have been a threat may also be a source of strategic strength as they incorporate them to complement their core.
Although platforms and ecosystems are not mutually exclusive, they are distinct. Platforms can help reduce market friction by connecting suppliers with the consumer, while ecosystems orchestrate complementary value propositions focused on a pattern of customer needs Fig. By adopting these innovative business model options, banks can complement their basic banking model deposits, loans, transactions and market strengths e.
