McKinsey’s Financial Institutions Group has released its second annual review on the banking industry, encouraging banks to undergo a “triple transformation.” The NeuGroup sees at least five ways that we can assist them as they engage in this process.
McKinsey explains “triple transformation” as follows:
Banks should aim high, fundamentally transforming their economics, business models, and culture—what we call a “triple transformation.”
First, with regard to changing the economics of banking, McKinsey notes that banks need to find new revenues: “Growth is becoming more granular and banks must identify and mine individual areas of expertise.” On the cost side, McKinsdy finds an irrefutable case for industrialization:
To achieve sector-wide productivity improvement, banks need to embrace the changes already seen in other industries, such as automotive, starting with simplified businesses—reflecting customers’ needs—streamlined operating models with strategic sourcing and digitized processes. An entirely new culture of full process transparency and control needs to be established. The time is right for a giant leap forward, with economic pressure and technological potential creating the conditions for change. [emphasis ours]
Of course, as banks look to create more sustainable business models in the wake of financial crisis and new regulation in response, they will need to explain these new models to customers. McKinsey suggests that:
“Business models will become more differentiated, with an increasingly important role for specialist players.”
As part of the third element, one of the more pertinent cultural transformations McKinsey recommends is dedication to true customer focus:
Banks need to redouble their commitment to creating value for their customer, ensuring transparency and meeting best-practice standards for products and services.
With this in mind, NeuGroups offer a transforming bank a strategic sourcing alternative to:
- share how it will differentiate itself
- articulate how it plans to add value for customers
- get input on customer needs
- find new revenue ideas
- exchange ideas on its approach to existing products and services, including how to implement best practices and cost-reducing industrialization of transaction processing without alienating its best customers.