Established banks should be much more worried about nimble digital native competitors

• The results of HFS’ Pulse study for 2H 2021 are in and they portend some come to digital Jesus* moments for established banks.
• The 2H iteration of our seminal Pulse study surveyed 600 respondents from the Global 2000 across North America, Europe, and Asia Pacific. Of these, 67 respondents hailed from the banking and financial services sector.
• HFS started 2022 reminding our readers that digital is now, not three to five years down the road.
• In our 2H Pulse survey, we asked respondents what the major business strategies their organizations are pursuing to meet their goals for the next 12 – 18 months.
• Our banking respondents indicated their top ranked business strategy is to use data as an asset (16%). This is likely to support both internal operations optimization (e.g. single touch lending underwriting) and scenario planning as well as to fuel the potential of monetizing data to support the launch and enablement of new products and services (e.g. open banking potential).
• When we combine the top three rated responses, data drops to third place overall edged out by a tie between enabling new virtual customer experiences (45%) and finding new markets or customer segments for their products and services (45%).
• While data, CX, and new products and services are all distinct strategies, they all point to the same essential need of established banks – that they cannot keep kicking the digital can down the road. They need to make progress, fast.
• Despite this need for speed, the most alarming finding in this data set is that competing against digital native disruptors is second to last. It underscores a worrisome lack of urgency in established banks to make progress on their top priorities. Or at least it showcases a lack of understanding about why they need to move fast. Either way, digital competitors are literally siphoning market share from established banks precisely because they leverage data as an asset, prioritize digital CX, and nimbly spin up new offerings – all enabled by cloud native architecture.

The Bottom Line: Established banks should be much more worried about nimble digital native competitors. Ignore at the expense of your market share.

*We’re equal opportunity here at HFS so please insert deity of choice.