These are pivotal times for retail banking. As the industry adjusts to the effects of COVID-19 and looks towards the future, the landscape is very different. Banks must negotiate a multitude of shifting factors — from changing customer behaviors to economic headwinds, intensifying competition, regulatory pressures and technological disruption.

In order to be successful, solutions and architectures will require more focus and finesse than simply bolting on new pieces of technology. Prioritization of effort in certain areas will make a difference; designing great experiences for customers, putting innovation at the heart of product development and servicing, and creating an ecosystem of partners that can be used to accelerate solutions and increase agility, while being aligned to achieve great customer outcomes.

It is this notion of becoming a Connected Enterprise that we explore in the content below, setting out the hallmarks of the future of retail banking and how this may manifest itself across what we believe will be the three dominant banking models in the new reality we are entering.

KPMG Connected Enterprise for Banking is our framework and approach for enabling customer-centric, end-to-end digital transformation that meets the new demands retail banks are facing. A future-ready, connected retail bank will have the capabilities to quickly respond to market signals and pivot to capitalize on opportunities as they arise.

Signals of change
Signals of change

  

New business models emerge

To deal with these signals of change, retail banks must develop a business approach which is supported by a connected operating model. There are five main retail banking business models in the market today – full-service banks, specialist banks, consumer credit providers, money transfer providers and digital wallet providers – but in the future, we believe three retail banking models will dominate, and a new type of ‘ambient’ bank will emerge.

One key attribute of the banking business models of the future will be a greater resilience to economic shocks such as those resulting from COVID-19.

Dominant business models of the future

  

Strategic imperatives and impacts

Across each of these models, five strategic imperatives will be to identify and serve customer needs; drive cost efficiency; adopt new and more agile ways of working powered by technology; comply with an increased volume of regulatory change; and carve out a role within the wider ecosystem.

In order to deliver on these strategic themes, KPMG professionals have identified eight capabilities that, together, align the operating model to focus on delivering value to the customer and the business. These are cross-functional and apply across the operating model. In our recent research, conducted by Forrester Consulting, they found over half (52%) of respondents are investing in at least six customer-centric capabilities.*

Eight capabilities, twice as likely to succeed

The eight capabilities of the KPMG Connected Enterprise deliver tools, methods and frameworks to achieve a new, better business-as-usual with agility and accelerated innovation.

To learn more, select each capability to access a short summary and corresponding capability slip sheet.

  • 2xImpact


Base: 412 professionals involved with customer strategy decisions at retail banking organizations
Source: A commissioned study conducted by Forrester Consulting on behalf of KPMG, September 2020

Source: A commissioned study conducted by Forrester Consulting on behalf of KPMG, September 2018  

Prioritizing connected banking capabilities

The business model of the retail bank will dictate relative value and priority of the connected capabilities. The eight capabilities are enterprise-wide and will align the operating model to focus on delivering value to the customer and the business.

Prioritizing connected banking capabilities

Footnote

* Base: 412 professionals involved with customer strategy decisions at retail banking organizations
   Source: A commissioned study conducted by Forrester Consulting on behalf of KPMG, September 2020