Ecosystem, data key for banks to keep up with disruptors

Banks must become the main choice of the customer, an analyst said.

Banks that wish to remain competitive must fight to become the main bank of choice of the customer, a market expert said.

Isaac Tan, partner at Boston Consulting Group (BCG), said that banks must reinvent their strategies beginning with winning the primary relationship.

“Banks are increasingly becoming a utility today as a balance sheet provider. How do you go beyond that to value act? Through human connection, advisory positioning,” Tan said, speaking to attendees of the Asian Banking & Finance Forum Malaysia 2024 held at DoubleTree by Hilton Kuala Lumpur.

Ecosystem
Key to this is developing an ecosystem. However, for many banks, developing an ecosystem partnership remains a question, Tan said.

Embedded finance is one answer.

“You need to think about what game you want to play in the ecosystem partnership. There's been a lot of talk about embedded finance. How do you embed something in another ecosystem?” Tan noted.

“Banks these days will talk about embedded e-commerce… which is banks trying to create an e-commerce platform in their channel so that customers do e-commerce and banking platforms,” he added.

But Tan warned that banks must find the right strategy to play. Everything is in a friendly model, according to Tan, with no “clear enemy.” This means that, in the future, these “friends” can become the banks’ enemies, too.

At the same time, a competitor in a space can become a partner that will enable the bank to do more.

Data
The new generation of customers want to be engaged online. About 7 in 10 (70%) want to engage with their bank online and want all their banking needs to be done online, according to Tan.

Whilst security is a concern, customers would be open to sharing their data with banks if they believe it can add value to them. 

“Data for value is important. How do you create a brand that is relevant to them? It’s no longer just about the trust of the bank. It's also about the branding and the reasoning with them, that they can see a purpose,” Tan said.

Expectations have changed — banks are expected to look at new ways of doing things, whether that means open banking, financial crime prevention, consumer protection, data privacy, Tan noted.