Financial institutions operate in highly globalized, regulated markets, often competitively selling commoditized products. In the New Normal emerging after the recession of 2008-9, these pressures require them to be agile to balance growth, efficiency and profitability. Consumers too are adopting new technology rapidly and their changing needs are driving banks to relook at ways they interact, purchase, and consume.
Emerging “fintech” companies are also disintermediating existing business models and institutions. By disrupting traditional financial supply and distribution chains, their innovations are attracting consumers for various reasons: costs, ease, security and privacy. Peer-to-peer lending, usage-based insurance, Cloud-based banking and investing, and financial marketplaces are just a few recent examples. While banks have been slow to respond to these changes, some non-bank players (including telecom, retail, and even automotive companies) have been grabbing the opportunity to enter the fray.