Business Today, Malaysia: Cognizant’s Senior Vice President of Banking and Financial Services Says Banks Need to Think Like Disruptive, Non-Traditional Rivals
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“Non-traditional rivals are creating new digital challenges and opportunities for the banking establishment,” writes Jaideep Poondir. “In the age of digital disruption, many banks are applying modern digital tools, techniques and partnership strategies as they recognize the need to engage disruptive competitors to sustain their competitive advantage.” Excerpts:
“Analysts concur that technology will play a more pervasive role in the banking and securities industry, with many institutions progressively investing in digital solutions and modernizing back-end systems, so as to increase reliability and speed.
Yet, heavy compliance requirements, rising cybersecurity risks and anemic revenue growth are among some of the constraining realities at banks’ high-margin businesses with innovative customer experience models.
Even banks at the forefront of new developments or ideas feel outwitted by the speed and scale of disruption caused by non-traditional rivals.
These disruptors are beginning to impact the stronghold of traditional banks, including personal and small business lending, wealth management, mortgage banking, commercial real estate and student loans. Furthermore, these upstarts are not constrained by regulatory restrictions that banks face domestically and internally. Hence, they are able to pursue opportunities in crowdfunding, peer-to-peer (P2P) lending, robo-adviser investment services, as well as payment network disintermediation, among others.
In the long run, these two factors―disruptive competitors and increasing regulations―may very well converge in ways that create new opportunities for banks.
Bankers have long traveled the regulatory road, constructing compliance systems, engaging with relevant authorities, as well as continually adapting to new mandates and expectations. However, disruptors that feel right at home in an innovation lab might be far less comfortable navigating and dealing with regulatory strictures. Therefore, some guidance from the veterans will always be welcome.
Banks recognize that they are confronted with uncertainties today and need to react accordingly. In order to seize the high ground, banks need to think like disruptors. They need to accept inevitable change, keep pace with innovation, and capitalize on their inherent and hard-earned strengths. Only then will they have a fighting chance to stay relevant in the game.”
Click below to read the article that appeared in Business Today magazine’s June 2016 issue.
