KPMG recently published its Future of Retail Banking report, which highlights active changes the banking sector is undergoing to remain profitable in a world that is quickly transforming itself. The report highlights 3 main business models for financial institutions of the future:
- The universal approach is focused on using data to develop ecosystems that have a large consumer base. The key with this approach is the use of transaction data to gain a deeper understanding of consumer behaviors.
- The transaction-focused approach is focused on payment services, particularly from the viewpoint of unit economics. It will be facilitated by open banking concepts.
- The ambient approach turns financial institutions into “invisible” agents embedded within everyday internet-of-things (IoTs) devices. It is based on a financial institution becoming a facilitator of transactions and having a deep understanding of consumer spending habits and credit needs.
Whichever approach a financial institution chooses going forward, it is important that they: (1) harness data and advanced analytics to produce actionable insights and a real-time understanding of consumers, (2) operate with efficiency and agility to fulfill consumer demands, (3) engage with third parties to provide better services, (4) create intelligent and agile services, (5) build consumer-centric organizations and cultures, (6) develop compelling value propositions and (7) design flawless experiences.
View the full report here.