Here is my report on the challenges retail banks face with the ongoing digital transformation. I was a speaker at the C-level Forum in Zurich and enjoyed other speeches at the forum through the day.
Dr. Patrik Gisel spoke about the ongoing change in retail banking. He highlighted its challenges when integrating digital transformation teams and cases into the current business. Mr. Gisel is the CEO of one of Switzerland’s most innovative banking groups, the Raiffeisengruppe or cooperative bank. He spoke about the need for his banking group to drive change in the coming years to master the shift towards online banking and Fintech innovation.
A general problem in today’s banking world is that even mass business doesn’t allow profitability. The players need a market segmentation in order to address specific clients’ needs. Additionally the demands for complexity in individual financial consulting are rising. Clients need to be addressed while looking at their overall personal finances.
Digital transformation drives banking needs for change
For Gisel the solution will be found in a continued Digitalisation or digital transformation allowing both: standardisation and the implementation of new business models. While Digitalisation helps to simplify banking tasks it also helps to turn its known processes upside down.
Raiffeisengruppe created a project called Arizon which contains challenges on three levels: people – processes – technology with the latter proposing the least challenges for retail banks these days.
I found it interesting that the retail banking group actually implemented a new team. The digital transformation process of the group is today lead by 3 people. The so called RaiLab includes digital natives with less banking background and people more of an innovative mindset. These guys have the challenge to present 10-12 new biz cases to the board per quarter. What a great opportunity without the necessity to look after daily demands of the existing operation.
Retail Banking in ten years
How does Gisel see Retail banking develop within the next 10 years: digital transformation will make transactions move completely into back office, customers will continue to receive consulting including personal finance and long term finance based on a set of data specific to their needs.
The big question is the remainder of physical banking outlets: the proximity to its client will continue for retail banks however 25-33% of branches will cease to exist. Banks will no longer do everything by themselves. Instead they will follow core competencies and partner with others.