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Becoming A Digital-First Bank:
How To Transform Your Digital Presence.

If the last few years have proven anything, it's that fintech is here to stay. With the rise of online financial services and paperless transactions, the need for digital-first banking has become increasingly apparent.

This whitepaper aims to help you identify how to transform your bank into a digital-first enterprise, including reworking your business model, working culture, and the technology which drives all of it.

Smart Bundling and Service Add-Ons

During the early days of the fintech boom, some of the savvier start-ups made a conscious decision to pick and choose which financial services they would focus on, such as lending or investment advice, rather than trying to tackle it all. This became known as unbundling, as it represented the move away from the all-in-one bundle model traditional banking institutions had been using for years. This meant more prominent, more established commercial institutions were no longer leading the market in terms of expertise about the products they offered. Instead, big banks began to find themselves susceptible to the cherry-picking tactics of these new, hyper-focused, up-and-coming digital-first companies.

Since then, there have been numerous examples of banks joining with specialist fintech providers to enhance their services to consumers. In some cases, this "re-bundling" allows banks to move beyond the traditional, narrow banking domain to a variety of valuable financial add-ons, like an investment, insurance, and even parking, in an attempt to help customers simplify their daily routines. This shift from simple banking features to add-ons has been a wildly successful business strategy for Chinese tech giants like Alipay and WeChat. WeChat, which started as a social messaging network, added a "payments" capability to streamline users' lives. It is now one of the world's most powerful payment brands.

Similarly, some major fintech brands, such as Revolut, have started adding traditional core banking services to their specialized areas of focus. Marcus, Goldman Sachs' fintech subsidiary, is another example of a harmonious blend of fintech borrowing traditional banking services to offer consumers the best of both worlds.

From a bank's point-of-view, this partnership of smart bundling traditional banking services with useful add-ons supplied by fintech start-ups allows them to continue being the customers' primary financial institution by offering better product features. This approach means they are far more likely to attract and retain customers, thus keeping a solid profit portfolio. Interestingly some fintech start-ups which were initially envisioned as direct-to-consumer brands to compete with banks, such as TransferWise, have begun to recognize the need to partner with larger banks as a way to reach out to their more established customer base.

Digital-First Banking for Digital Savvy Customers:

We believe the digitalization of banking will create a future where Digital Hubs provide critical financial services.

Digital Hubs are platforms with which people would interact, like Siri, Alexa, or Google Assistant. It is the consumer's gateway to their financial life. Data can be collected over time to predict the consumer's situation and economic interactions. This means their needs will be anticipated and, where permission has been given, acted on.

How to become Digital-First:

Two or three years ago, new digital technologies and how their application could reshape banking services were primarily a topic of discussions at conferences, experiments at the Innovation Labs of bigger banks, and think pieces in financial blogs and news outlets. Now, they are necessary for larger banks who wish to stay competitive within the financial world.

Digital leaders are increasingly adopting these new and innovative technological advances to gain market advantage to stay relevant. The market transformation towards being digital-first is well underway.

The actions necessary to become a Digital-First Bank fall into two categories:

  • Strategy & Propositions: defining future business models to drive customer value.
  • Delivery & Operations: developing organizational capabilities to deliver new propositions with speed, agility, and efficiency.

The Staying Power of Digital First Banking

One thing is certain: current business models quickly become irrelevant, as their cost-income ratios are too high and velocity of change too low. This is why, as introduced in this report, business models need to be transformed to incorporate and even changed to put digital banking solutions front and center. For example, neobanks and challenger banks that adopt a digital-first business model where the entire organization is fully digitized. This approach to bringing new products and services to the market in a digital rather than paper format is taking the financial world by storm. Existing banks that can properly adopt a digital-first business model and adopt agile practices, including focusing on niche markets on top of standard banking packages, are able to move forward and continue to grow in a lucrative way. Whereas, banks that refuse to adapt to this new digital-first approach to banking, run the risk of becoming obsolete or, in the best-case scenario, merely a service platform for other, more modern financial institutions profit from