The leadership perspectives — trends in commercial banking…What does the future hold?

WE are now living in a rapidly changing world and the banking industry is not spared from the same phenomenon. The big question to always ask oneself as a banker is where are we headed?

What does the future hold? How can one keep pace with these changes and remain relevant? What formula can one apply to make sense in this VUCA world?

Besides the inevitable continuous shift in technology and the presence of Fintechs all over, one thing for sure is that consumer tastes are continually shifting. The commercial banking space and indeed the whole financial services industry is going through a massive shift.

To stay relevant and abreast, there is need to watch trends and have a plan on how to respond for business sustainability and survival. Researchers have given indication on the key areas to lookout for going forward.

Patson Mahatchi is the Executive Head of Business & Commercial Banking at Stanbic Bank Zimbabwe

Some of the key themes coming cover, among others — Rise of Fintech companies, Digital Transformation, greater focus on customer experience, more focus on sustainability and regulatory issues. Current trends suggest that the Metaverse will become the next frontier of innovation. Other trends coming up relate to Risk management, which will impact strategy, new approach to talent acquisition & employee culture and modernisation.

It goes without saying that one cannot implement a successful strategy without putting sufficient focus on data as a commodity that can be used to enhance the quality of client conversations.

Having clarity of mind on these trends as one crafts strategy and leads is mission critical. I will now unpack some of the key global trends and what these mean for leadership.

Metarvese – The metaverse, has been defined by Tech Target as ‘a vision of what many in the computer industry believe is the next iteration of the internet: a single, shared, immersive, persistent, 3D virtual space where humans experience life in ways they could not in the physical world’.

They further explain, that for one to understand this better, one needs to imagine a virtual world where billions of people live, work, shop, learn and interact with each other — all from the comfort of their couches in the physical world. In this world, the computer screens we use today to connect to a worldwide web of information have become portals to a 3D virtual realm that’s palpable — like real life, only bigger and better.

Digital facsimiles of ourselves, or avatars, move freely from one experience to another, taking our identities and our money with us. This will provide a continuous and immersive digital experience to the user. Researchers concur that Gen Z will enjoy this revolution as they struggle to conform. It is considered that metaverse will drive commercial banks to embrace mobile banking and automation the same way Digital Transformation did.

This will enable their clients to connect and choose products and services under one roof. That’s why there has been the growing trend open banking APIs (Application Programming Interface) as this enables banks to share data with trusted and verified sources to enable access to more financial services. Machine learning, scalability and embedded client experiences will all help drive the client experience.

Leadership is the most fundamental competence in human life.

Talent – A new approach to talent will take over. This will generally respond to acquisition and culture. This is premised on the fact that the right talent breeds the right culture. Covid-19 enabled the workforce to experience work from home and then the Hybrid working arrangement.

In general, what this has done, is cause a seismic shift to the previous siloed approach in the commercial banking industry. There is growing demand from talent to work in a more flexible environment that allows them to acquire new skills and more fluidity in how work is done.

Banks will therefore, have to increasingly align to these demands to attract and retain talent.

Fintechs – Banks will have to become more serious in their cooperation with Fintechs. When they came onto the scene they were viewed as competition.

Now banks will need to collaborate more and partner with the Fintechs to deliver a holistic customer experience. When an organisation is digital to the core, there is no front, back or middle office, hence it is critical to embrace competition and work with Fintechs.

According to the Boston Consulting Group, ‘The fintech sector, currently holding a mere two percent share of global financial services revenue, is estimated to reach $1.5 trillion in annual revenue by 2030, constituting almost 25 percent of all banking valuations worldwide’.

This gives one a sense of how much important it is to collaborate with Fintechs in order to have a share of this transactional business.

Customer Focus – This will be enhanced through real time and accurate client insights to react and respond appropriately, without guessing on what the client really wants.

Offering what the client is clamouring for and doing it to perfection is what will build a sustainable business. The delivery of more enhanced customer focus will also be aided by personalisation. This means using a combination of technology and nurturing a relationship with clients to optimise their experience.

This essentially entails a shift from customer journeys to customer intent. Customer intent is defined as ‘the thoughts directing a customer’s decisions or actions towards a particular purchasing event’. Sustainability – Banks have to be very intentional in driving the sustainability agenda.

There is growing pressure to reduce greenhouse gas emissions and drive the sustainability agenda in earnest. This is no longer a “by the way” matter discussed in passing and then shoved aside. This is high priority. There is global pressure and awareness on climate change and banks are under pressure to reduce their carbon footprint.

Banks have to start following the Global Alliance for Banking on Values (GABV) principles of sustainability, which promote sustainable and responsible banking practices that promote social and environmental benefits.

Data – Most banks talk about data and endeavour to drive their respective journeys, but that process has generally been slower than the complexity of the consumer and how they drive use and monetisation of that data.

The use of Artificial Intelligence and Predictive Analytics is what will see the realisation of these benefits going forward. Banks sit on a lot of data, but have not been able to use it to the extent they should.

Risk – The changes that escalate also come with new levels of risks and emerging risks. This means that risk practitioners will come up with new ways, to measure and monitor risk to stay on top of the situation.

It is therefore, critical that in crafting any commercial banking strategy going forward, these global trends be examined and be properly considered for the strategy to remain relevant and responding to the client, the people, the shareholder, the regulator and indeed all key stakeholders. This will ensure trading beyond profit, but sustainability and purpose. By Patson Mahatchi

Mahatchi is the Executive Head of Business & Commercial Banking at Stanbic Bank Zimbabwe.