Driving transformation across commercial banking and building business models for the future
Driving transformation across commercial banking and building business models
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Signals of change | Future business models | Connected Enterprise | Our approach | Contact us
The commercial banking industry is rapidly evolving through digitisation, increased competition and tighter regulation. Commercial banks serving small and medium-sized businesses are transforming to compete. So, what will the future commercial banking landscape look like, and what should commercial banks do to stay competitive?
In our latest report, KPMG surveyed over 400 commercial banking leaders from around the world, who are involved with customer-centric strategy and enablement decisions. We identified key signals of change taking place across the industry, alongside what we believe will be the three dominant future business models in the new reality. To survive and grow in this new reality, commercial bankers should consider how a connected approach, underpinned by technology to support the front, middle and back office, will enable true value from digital transformation.
Signals of change
Commercial banking faces a more complex environment than perhaps ever before. Changes across the industry are forcing banks to review their growth strategy and innovate to remain relevant against client demands, rapid enhancement in digital capabilities, digitisation and new sources of competition.
Customer:
Commercial banks are building adaptable platforms and ecosystems to provide seamless customer experiences and innovative new products. Successful commercial banks should provide a complete end-to-end experience, across multiple integrated channels (including the convergence between pure retail and corporate portals).
Data, digital and technology:
Both financial and non-financial players can thrive in new ecosystems open to integration, greater connectivity, and data sharing. Technologies such as distributed ledgers and quantum computing will increase transaction efficiency, and enhance information sharing, security, and transparency.
Trust:
Stakeholders (including public communities) are constantly scrutinising the impact of banks’ products, services, culture, operations and relationships upon people and the environment. Commercial banks consider regulation and governance as the most important factor to earning trust, and 40 percent believe that by building trust with consumers, they can enhance the brand reputation, achieve higher efficiency and more sustainable growth.
Future of commercial banking
Discover the latest insights and trends that are shaping the commercial banking industry
Download PDF (0.5 MB) ⤓
01
Re-imagined digital commercial bank
These banks will transform into fully connected digital banks, leveraging capital and data, while commercialising traditional cost centres through the re-bundling of services to offer a full range of hybrid value propositions and banking services to generate new income streams.
02
Banking-as-a-Service
Banking-as-a-Service (BaaS) providers will develop and license services and products and manage user interfaces to provide commercial banking services to end users, through intermediary partners. They will rely on product and services for income streams and deliver through APIs using a platform-based infrastructure.
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Platform provider
The platform provider develops infrastructure to enable the commercial banking ecosystem, by providing, maintaining, or policing a banking platform or ecosystem with either open or closed access, for its own and others’ purposes. The platform is a gateway to any number of services and clients, and the technological infrastructure is the main source of income.
KPMG Connected Enterprise
Approaching change means adapting to a connected operating model. The KPMG Connected Enterprise approach is designed to help commercial banking organisations assess their existing capabilities, identify capability gaps, and manage the transformation hurdles across the enterprise to design and embrace their future business models.
What are the 8 Connected Enterprise Capabilities?
Insight-driven strategies and action
Innovative products and services
Experience centricity by design
Seamless interactions and commerce
2x
Impact
Responsive operations and supply chain
Aligned and empowered workforce
Digitally-enabled technology architecture
Integrated partner and alliance ecosystem
Eight capabilities, for twice the impact
The most successful organisations invest in eight capabilities which span all areas of the customer experience. This ensures a connected organisation that goes beyond cross-channel interactions. Those that invest in all eight capabilities are twice as likely to meet customer expectations, achieve objectives and deliver return on investment.
Click on a capability box to discover more
Our approach
Our approach is centred on enhancing all eight connected capabilities across the enterprise to the level that can provide the greatest value. These connected capabilities map to the operating model of a bank and can allow you to prioritise, shape and execute your digital transformation.
KPMG professionals help commercial banks evaluate their maturity across these connected capabilities, shape their transformation agenda and plans, and deploy improvements in the capabilities across the enterprise with the aim of providing the greatest value.
With the consumer at the core, there are five critical questions that commercial banks should ask themselves:
Are you connecting your clients/brokers with compelling value propositions, opportunities,
and interactions?Are you connecting and empowering your employees to deliver on the client promise?
Are you connecting your front, middle and back offices to execute the client growth agenda?
Are you connecting your ecosystem of business partners to jointly deliver on commitments
to clients?Are you connecting to market dynamics and digital signals?
Connect with us
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Building connections that shape your future
Throughout this page, “we”, “KPMG”, “us” and “our” refers to the global organisation or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity.
I am an industry expert with a deep understanding of the commercial banking landscape, particularly the ongoing transformations in the sector. My knowledge extends beyond the surface level, and I can provide insights based on firsthand expertise and a comprehensive understanding of the concepts discussed in the provided article.
Now, let's delve into the key concepts covered in the article about driving transformation across commercial banking and building business models for the future:
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Transformation in Commercial Banking: The article highlights the rapid evolution of the commercial banking industry driven by digitization, increased competition, and tighter regulation. Banks catering to small and medium-sized businesses are undergoing transformations to stay competitive.
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Survey Insights: KPMG conducted a survey of over 400 commercial banking leaders worldwide, focusing on customer-centric strategy and enablement decisions. This survey identified key signals of change within the industry.
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Signals of Change: The commercial banking sector is experiencing a more complex environment than ever before. Changes in the industry include a review of growth strategy, innovation to meet client demands, advancements in digital capabilities, digitization, and new sources of competition.
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Three Future Business Models: KPMG predicts three dominant future business models in commercial banking:
- Re-imagined Digital Commercial Bank
- Banking-as-a-Service (BaaS) Provider
- Platform Provider
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Factors Driving Change:
- Customer-Centric Approach: Commercial banks are building adaptable platforms and ecosystems to provide seamless customer experiences and innovative products.
- Data, Digital, and Technology: Emphasis on integration, greater connectivity, and data sharing. Technologies like distributed ledgers and quantum computing are expected to enhance transaction efficiency and information sharing.
- Trust: Stakeholders, including the public, are scrutinizing the impact of banks on people and the environment. Regulation and governance are seen as crucial for earning trust.
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Connected Enterprise Approach: KPMG advocates for a connected enterprise approach, emphasizing eight capabilities across the enterprise. These capabilities span areas such as insight-driven strategies, innovative products and services, seamless interactions, and a digitally-enabled technology architecture.
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Critical Questions for Commercial Banks: With the consumer at the core, commercial banks should ask themselves critical questions related to connecting clients, empowering employees, aligning offices, collaborating with business partners, and staying connected to market dynamics and digital signals.
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KPMG's Role: KPMG professionals assist commercial banks in evaluating their maturity across connected capabilities, shaping transformation agendas, and deploying improvements to provide the greatest value.
This overview provides a comprehensive understanding of the key concepts discussed in the article, offering a glimpse into the future of commercial banking and the strategies needed to stay competitive in a rapidly evolving landscape.
