Reinventing Banking for the Future

The banking industry is a leader in digital transformation. By constantly innovating and using advanced technologies the big players have adapted better than the small savings associations to a rapidly evolving market structure.

However, our data demonstrates there are still significant vulnerabilities in banking companies that fall outside the vision-driven quadrant. Rapidly changing product-service portfolios and a push for convenience are holistically connected, with consumers having an unprecedented level of choice between all industry players. For banking firms that fail to digitalize, or do so sub-optimally, they risk falling behind in the digital era. Banking incumbents must move steadily to stay ahead of digital competitors by reinventing the customer value proposition.

>Digital Transformation in a Highly Competitive Market

Top Concerns for CEOs in the Banking Industry

Banking CEOs have numerous concerns around the future of their industry. Here are the top six concerns that need to be addressed in the digital era:

Adopting Digital Services

Adopting Digital Services

Almost all CEOs are concerned about the pace of technology-driven change in the banking industry. As technology becomes more prevalent, and digital services are increasingly adopted by consumers, traditional banking products and services will lose value.

Meeting Consumer Demands

Meeting Consumer Demands

Consumer lifestyles are more digitalized than ever, and this mandates a different approach to banking service delivery. Many consumers prefer low or no-contact, with automation and self-service becoming the preferred banking method. As a result, this has led to an increased consumer focus on value over loyalty, levelling the playing field between disruptors and incumbents.

Reinventing the Status Quo

Reinventing the Status Quo

Direct-to-consumer (D2C) models such as with peer-to-peer (P2P) lending are reinventing the status quo, enabling anyone with enough capital to offer banking services. In addition, challenger banks and FinTech companies are reinventing the banking business model, putting incumbents at risk if they fail to digitalize and innovate on their product-service portfolio.

Changing Political Climates

Changing Political Climates

Geopolitical instability and socioeconomic risk factors in areas such as the Middle East, South Asia, India, and China are driving volatility around exchange rates and currency values.

Finding New Talent

Finding New Talent

Digitally savvy managerial talent is increasingly hard to find for banking incumbents, as FinTech companies and digital-first start-ups offer a more lucrative and valuable employee experience. This is making talent acquisition and retention increasingly difficult, creating a skills gap in the banking industry.

Security Threats

Security Threats

Financial assets are converting to digitalized formats. Attackers no longer need to gain access to a physical vault, with usernames and passwords being the key that unlocks these financial reserves. Cybersecurity and cyber espionage are becoming more commonplace, creating new expectations among consumers for banks around security, data protection, and compensation in instances of monetary loss.

A Quiet Digital Banking Revolution

Smaller banks have historically been reluctant to enact change. This lack of dynamism and forward-thinking extends across commercial and retail banking sectors, engraining conservatism in the banking industries culture and DNA.

While the big players have broken free of this conservatism, around 50% are still failing to innovate and adapt to the emerging digital banking landscape. This includes banking institutions across North America, Europe, and parts of the Asia-Pacific (APAC) economic areas.

Some areas in which the progressive 50% are excelling include digital transformation of data access, with consumers gaining deeper insights into their spending. Transaction digitalization is another key area that makes purchasing easier across desktop and mobile devices for consumers. Still, these banking firms are failing to add new items to their product-service portfolios.

Industry players need a high-awareness and sensitivity when adopting new technology-driven business models to maintain pace or exceed competitors.

The Most Successful Digital Transformations Are Powered by Analytics Capabilities

Our benchmarking services are powered by over 1.5 million data points in addition to our primary research and data collection capabilities. With access to leaders across more than 40,000 companies in various size segments, industries, and geographic locations, we can quickly gather additional data to address how your business is performing against the competition.

A graph showing which industries are investing the most in digitalization.

Source: Trasers

Data analyzed in this report comes from 4,000+ responses. For the banking industry, data from 274 companies have been used

Our banking industry experts can offer insights into the following sectors:


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Reimagining the Banking Services Customer Value Proposition

Reimagining the customer value proposition across the banking industry is essential for reinventing the customer value chain. Cashless transactions are becoming more widespread, and this presents an economic opportunity for disruptors with alternative business models that integrate digitalization at its heart.

New digital banks are holistic and un-siloed, enabling a global ambition thanks to delocalization of digital services. This is enabled through the cloud, artificial intelligence (AI) or machine learning (ML), and robotic process automation (RPA) technologies. Incumbents lose their advantage in the face of these digital technologies, enabling disruptors to provide innovative and holistic services to their customers.

While traditional banks have a safety net in the form of reputation, market presence, and regulatory bias, these new business models are rapidly changing the banking landscape. Routine bank accounts and ATM transactions will become obsolete, with digital-first service provision becoming the priority for consumers. Current leaders must digitalize their internal operations and develop higher levels of customer intimacy to brace themselves for this digital storm.

Only 7% of Companies Are Delivering on Their Transformational Initiatives

Our research has shown that 30% of companies will fail to survive this decade due to an inability to evolve digitally. To address this negative trend, we have developed the Digital Enterprise Evolution Model™ (DEEM).

Digital Enterprise Evolution Model™

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DEEM allows our clients to recognize digital evolution patterns, implement benchmarking and prioritization strategies, and initiate application management protocols to satisfy stakeholder and market requirements.

Many Banking Firms Sit Outside the Vision-Driven Quadrant

There are a finite number of competitors in the banking industry. This increases visibility between competitors, enabling combative innovation and proactive product-service development.

Still, most banking firms sit outside the vision-driven quadrant, putting them at significant risk in the face of digital disruption. This demonstrates a lack of urgency among banks; despite large players reporting significant investments in digitalization, sub-optimal execution of digital transformation roadmaps is undermining their efforts.

Many banking companies report large investments in advanced analytics and process digitalization, including robotic process automation (RPA). There is still room for improvement for these firms when developing an integrated strategic approach for the digital era.

Human Capital Management (HCM) in the Banking Industry

Future banking models must address the customer lifecycle, the emergence of cashless societies, and include the development of innovative alternative banking products or services that go beyond basic service provision.

To enable this, banking firms need talent. Human capital management is another area with large investment from banks, where experience is vital to navigate this complex and highly regulated industry. The largest investment in HCM is through digitalization of processes and the adoption of advanced analytics, assisting with the acquisition and retention of banking talent for incumbents.

To enter the vision-driven quadrant, CEOs must seek to benchmark their operations and form comparisons against leaders in the space. CEOs can benchmark their banking operations using models like the Trianz Digital Enterprise Evolution Model (DEEM™).

In summation, banks must focus on reinventing their product-service portfolios, catering better to consumer expectations, and optimizing their workforce for better customer experiences (CX) and employee experiences (EX).

Experience the Trianz Difference

Trianz enables digital transformations through effective strategies and excellence in execution. Collaborating with business and technology leaders, we help formulate and execute operational strategies to achieve intended business outcomes by bringing the best of consulting, technology experiences and execution models.

Powered by knowledge, research, and perspectives, we enable clients to transform their business ecosystems and achieve superior performance by leveraging infrastructure, cloud, analytics, digital and security paradigms. Reach out to get in touch or learn more.

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