Why banks need new operating models
MANY banks have recognised that they need a truly differentiated strategy as the industry's economics have come under pressure from new technology and entrants with disruptive business models. For example, large technology firms such as Alibaba, the Internet giant in China, and Kakao, the messaging giant in South Korea, have been moving into markets such as payments, raising customers' expectations for better digital tools and simple, convenient service. As a result, some banks have exited businesses or countries where they have operated for decades, while others are reinventing their core identity.
Just as banks have been relearning the art of strategy to build competitive advantage, they also must develop operating models uniquely suited to their strategy, rather than models based on generic industry benchmarks.
Banks will have to rethink the role, structure and processes of critical functions such as IT, risk and compliance. Leading banks are making inroads in five areas that allow them to build operating models that suit their strategies-in-the-making and which they can flex as new priorities emerge.
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