“Everything changes and nothing stands still”- Heraclitus
The Banking and Financial Services Industry is at an inflection point today owing to the growth of technology and consequently, the rise of the Global Digital Economy, at a pace that has no historical precedent. With the advent of the fourth industrial revolution, widespread adoption of technology in all walks of life and a sea-change in consumer behavior, the impact is being felt strongly by all sectors, more so by the banking and financial services providers. In India, the 4Ds (Development initiatives by Government, De-Regulation, Demographics, and Disruptive Technology) have started prompting banks to either innovate or face obsolescence risk in the future. These circumstances present the BFSI industry with a brilliant opportunity to turn the tide, by opening gates to collaboration with new-age technology players and building stronger relationships, thereby potentially launching the entire industry on a higher orbit.
A.R.T – Alliances, Relationships and Technology
Banks need to insure themselves against ‘obsolescence risk’ and there’s no turning away from the fact that this requires collaborations. Disruptions presented both by new entrants as well as incumbents need complete re-platforming of the banking bedrock, strengthened by robust technology, people and processes.
The A.R.T – Alliances, Relationships and Technology – approach to banking can help a bank leapfrog technological disruption across different verticals. A critical aspect while implementing this approach successfully is to monitor the vigor with which new alliances and resulting innovations are driven across the organization and initiate mass change in the organizational psyche to adopt the ‘A.R.T approach to Banking’.
Companies around the globe have realized the merits of adopting business models based on ‘collaboration over ownership’ in a dynamic socio-economic environment. For instance, one of Procter & Gamble’s most successful partnerships has been with InnoCentive which has helped them leverage InnoCentive’s global network of Solvers to co-build creative solutions for their most daunting product development challenges. Similarly, Capital One, one of the youngest but fastest growing top ten banks in the US has since inception adopted collaboration and an ‘information-based’ strategy as a fundamental tenet. Continuing with this strategy of wisely choosing alliances, the company launched the Capital One Labs to accelerate innovation by inviting young designers and internal executives to work together on innovative products & services built across a network of labs in the US, to enable innovations without hindering on-going projects.
Another fascinating case is that of a six decade old company Lego that began its transformation journey in 2004 to avert bankruptcy. Lego in its pursuit to ‘transform into a digital company’, built Future Lab to kick-start digital projects by honing in-house talent and spinning an entire open collaboration platform – Lego Ideas, that allows fans (customers) and partners to experiment together and introduce new ideas to make Lego better. This digital transformation exercise pulled Lego out of bankruptcy and skyrocketed their growth to a 20% CAGR from 2009 to 2014. Who would have imagined a world where an inter-locking plastic bricks toy company would go digital and find new revenue channels to become the “Apple of Toys World”. These anecdotes epitomize industry agnostic collaborations and a more democratic set-up where customers’ voice is loud and clear in the digital economy, setting the tone for a new normal.
Having sensed the opportunity right, several companies in India have also begun adopting the A.R.T approach to running a successful business instead of working in silos and reinventing the wheel. Banks should adopt the mantra of ‘collaboration and co-creation’ rather than competition with emerging Fintech companies.
Rana Kapoor MD & CEO Yes Bank and Chairman Yes Global Insititute, writes this piece for FICCI’s FIBAC 2017 Knowledge Paper. Post continues on Page 2.