Digital Darwinism: How banks can prepare for a Digitally-Reimagined future?

Rapid digitalization and the breakneck evolution of technology have become a full-scale disruption for the global business world. One of the most significant consequences is that incumbent companies are disappearing as more digital natives (companies born in the digital age) enter the market. Many people are referring to this period as ‘Digital Darwinism’- an era where technology and society are changing at a faster rate than enterprises can adapt.

Futurist and digital prophet Brian Solis has been vocal about how digital Darwinism is transforming the business landscape. Consumers are connecting and communicating with brands differently. Employee expectations and values are evolving. There’s a fundamental shift in the mindset from products/services to experiences and results. And business models are changing with a laser-like focus on organic innovation.

Simply, with their hands forced, businesses are having to adapt to technological advancements much faster than their in-built metabolism.

And at the forefront of this is the banking sector. According to a study by Accenture, banks that have a ‘clear-eyed perspective on digital transformation will emerge as the leaders of the future.’ In other words, banking institutions can no longer afford to wait and watch; they need to act and act fast. In fact, a Deloitte survey suggests that banks need to start putting strategies in place now if they want to be prepared for banking in 2030.

This requires banks to relook at their current business model and leadership style. To back every digital decision, strategy, and initiative underway, they need:

• supportive leadership with a pointed vision
• supportive methodologies that mirror real-world developments in consumer behavior
• supportive processes that align with market changes

This means that banks will need to reverse engineer their investments in new digital products and a new business structure, even if that means starting from scratch.

Five Digital Forces at Play

For rapid, data-driven, and cost-effective digital acceleration, banks need to capitalize on the five digital forces - social media, mobile, analytics, cloud, and Internet of Things (IoT). This is what the traditional investment firm turned digital consumer bank, Marcus, did.

Calling themselves a ‘150-year-old startup,’ Marcus went off the beaten path. Instead of leveraging Artificial Intelligence (AI) to ‘fix’ a broken system and cut operational costs, it identified three underlying pain-points of its customers:

1. The users have a fragmented and confusing relationship with money.
2. They feel an undeniable opaqueness around the borrowing process.
3. They are frustrated with the inability to save.

The proposed solution? Instead of resorting to aggressive face-to-face selling, the bank leveraged digital technology, programmatic data analysis, and a user-friendly interface design to acquire customers in a simple and transparent way. More importantly, it understood the dynamic changes in consumer behavior and patterns and used technology to drive transformational changes.

Technological Disruptions in the Banking Sector

Customers today want personalized banking solutions. They desire an emotional connection with the bank, instead of a transactional one. Most importantly, they want banks to be ‘relevant’ to them.

To make the business more human (and not robotic as popular opinion might claim), banks are leveraging technological solutions such as virtual banking, biometric technology, Artificial Intelligence, blockchain technology, RPA, etc, to their advantage.

The real trick in leveraging these future-proof technologies lies in transforming and empowering the banks’ people, culture, and processes. This will ensure a competitive advantage and help build a happy and informed consumer base—which will always be at the center of the bank's efforts.

The Bottom Line

True to Darwin's theory, banks realize that to survive in the long run, they do not need to be the strongest or even the smartest; they just need to flex their digital ‘adaptability’ muscle to outperform competitors, catalyze value creation for customers, and grow exponentially— to cater to the discerning digital customer.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Metra Trust or its affiliates to any licensing or registration requirements. Metra Trust shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.