Customers and competitors are forcing traditional banks to accelerate innovation. In both services and delivery, innovation enables banks to remain relevant and retain primacy with their retail and commercial customers. Innovation also enables banks to compete with incumbents and non-traditional players.
Bank margins face new pressures in the long term
At their core, banks have been a major driver of both developed and developing economies. Bank lending enabled consumer spending and business investment. Banks facilitated payments. Banks provided savings options and other financial services to a variety of customers, from individuals to businesses and municipalities.
Of course, banks still do all of these things today and will do them for the foreseeable future. But in the absence of innovation, the past tense emphasizes that Tech brands could become the primary intermediaries with “banking” customers.
For years, banks have been dealing with an already difficult environment for interest rates and regulation. If banks are relegated to the background and commoditized, they would face further pressure on margins and related metrics like ROA and ROE.
Continued in full whitepaper.