The Distribution Enterprise – Bank of the Future

Once upon a time …  that’s how some futurists would like to see history books talk about banks. They were institutions of trust, integrity and safety they would say. Over the last few months, reams of newsprint has been dedicated to the new age customer and the phenomenon of Fin tech , slated to render banks redundant. Whether this proclamation will come to pass, only time will tell. However, I believe, three words - Trust, Integrity and Safety are as relevant to “Banks” of tomorrow as they were for banks 100 years ago. 

As we speak, an interesting evolution is taking place and it is not very different from the way fashion evolves. Certain trends will be in vogue and there will be crests and troughs as one style replaces another. And as it is with  fashion, there will be unrecognized geniuses whose ideas  will  inspire a whole new range of apparel but will themselves  not see as much success or profit by it, either because they came in too early in the wave or had an idea that was splendid but had little practical use. Then will come those who are not ahead of the curve and have the foresight to “productize innovation”. These institutions can be best characterized as those who are champions at taking a great idea and making it a volume play. Distribution of innovation as a core competence will produce the mass market brands of the future. 

This may sound counter intuitive at first, but if one looks back in time, there are examples galore of businesses that have played the game of distribution to their advantage. This concept is not new to banking either, over the years we have seen products designed for wealth management trickle down to become mass market solutions.

So what’s the winning sauce here? I think it lies in the way banks architect themselves for the future. There are a few pillars on which this distribution of innovation can be built. It begins, first, at the level offers and products, this brewery cannot afford to be stuck in processes and IT hassles, it needs to be able to churn out bundles of services at the click of a button. Second is price where the game of wallet shares will see winners; you will have to think about volume plays vs value plays. Third is the idea of managing exposure - you are a “bank” there is no way you can compromise trust, integrity and safety – this will make or break your brand. 

These three pillars will form the backbone on which rests the idea of participation in ecosystems of commerce. Ecosystems of commerce are value chains owned and operated by individuals, SMEs and large corporations into which the “bank” will reside. The new bank will be equipped with process which can be rapidly configured to suit the ecosystems in which they operate. These ecosystems of commerce will be the new definition of service which will be offered to clients, bundled with banking as a component.  

It is this ability to productize innovation that will wield the power to create the next big Fashion store of the future. Ever changing, ever innovating yet firmly grounded in the fundamental principles of banking- Trust, Integrity and Safety. 

Tushar Chitra is the Senior Director for Product Marketing at Oracle Financial Services. He can be reached at Tushar.chitra AT oracle.com.

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