Financial institutions that win in the market five years from now will look very different from the organisations we know today, said Ernst & Young.
The firm said the difference would be driven by people and teams, as much as it is by technology and data.
“Just as they rethink their technology, banks must also rethink how they attract, engage, develop and inspire their talent.
“Dynamic, flexible working environments and self-governing teams will likely be the hallmarks of tomorrow’s strongest banking cultures,” it said.
It revealed in its report entitled “Customer experience: innovate like a FinTech” a new approach to talent was that many simple teams are becoming automated.
“Teams increasingly need to be cross-skilled and focused on the collaboration of lines of business and organisational functions. Multidisciplinary skill sets will be at a premium.
“Specifically, banks should look at technical and creative skills around customer experience (CX) and user experience (UX); entrepreneurial mindsets and self-motivation; innovative problem-solving, especially relative to customer needs; and collaboration within diverse teams, including external groups,” it said.
In a move to drive change, it said, some banks have experimented with incubator models or created internal innovation labs that are responsible for bringing employees from different parts of the bank together to develop ideas for innovation, assess the feasibility of various options and even create implementation plans.
“Other banks choose to collaborate directly with third parties, including fintechs, to discuss ideas, evaluate new technology developments and then make decisions as to whether they are the right fit for their bank before implementing them,” it said.
Alternatively, banks can collaborate with fintechs to deliver better outcomes for customers.
“For traditional banks, innovation can be accelerated through collaboration with fintechs. While fintechs were initially seen as threats to banks, we believe that banks and fintechs will increasingly collaborate. The new competitive landscape requires a new approach to engagement with such firms,” it said.
Banks that have begun the process have explored a number of approaches, including the creation of focused teams and programmes to scan the market continually, monitor fintechs and other new market entrants, collect ideas and applicable practices from other sectors, and examine ways to implement them within the realm of existing operations, be it through emulation or partnership.
“Acquisition of new players, including fintechs, is still another option for gaining access to innovative ideas, technology and talent.
“Banks that take the M&A route may be able to capture a new market or service area quickly, launch new products or enhance the customer experience greatly. Whatever the precise form it takes, fintechs will increasingly be the innovation engine for the banking industry,” it said.