The burning platform of retail banking

Something major is happening in the realm of banking. While retail banks have grown accustomed to dealing with competition from other banks, financial deregulations and economic downturns, something is different this time around. With rapid digitalisation, changes in consumer behaviour, and emerging financial technology (Fintech) – players such as Affirm and Square, the battle is being fought on grounds of new and disruptive business models. Nowhere is this more visible than in the area of retail banking.1 Most retail banks are not equipped to respond to these new threats and many will struggle to survive the next decade. The prediction from Bill Gates is arguably starting to ring true. Most retail banks are not equipped to respond to these new threats and many will struggle to survive the next decade. One major hurdle lies in the lack of innovative capability necessary to uproot and reinvent old business models. Building this kind of capability requires a focused and long-term commitment in what is a new area for many banks. But, even if the commitment is there, attempting to build such capability solely in-house can be costly and slow, if at all feasible. Hence in this article, we first briefly describe the “burning platform” of retail banking and argue how adopting open innovation practices can help banks invigorate their business models and thereby regain their competitive edge.