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Banks compete for customer trust and mandate
Insights from this year’s International Heads of Retail Annual Dialogue, held in Dubai in March 2019 and attended by heads of retail banking from the Middle East, Asia Pacific and West Africa, reveal that banks are close to an inflection point which could see them lose their customer mandate altogether.

July 12, 2019 | Richard Hartung
  • Heads of retail banks said that developing partnerships and ecosystems is the best way to meet customer needs.
  • While data and digital transformation are important, banks must also change their cultures so that staff fully embrace the changes.
  • Leadership for such massive shifts must come from the top.

In kicking off the dialogue among retail banking leaders, The Asian Banker chairman Emmanuel Daniel called vital attention to how a traditional institution maps its own journey. Financial institutions are currently in a phase where they are the net beneficiaries of the digital divide, as regulators have mandated that digital transactions are funnelled through these institutions. The key questions, he said, are identifying the point at which traditional institutions lose their mandate, the trigger point that can disintermediate traditional financial institutions and the ways to overcome those challenges.

Key issues for banks

The bankers agreed that banks are close to an inflection point. They are so stuck in silos, one banker said, that they run the risk of being marginalised and relegated to being “dumb pipes” that simply carry transactions, unless they take action and changes their models.

Once they lose the trust of their retail customers, another observed, the door is open for challenger banks. A key example is Australia, where a Royal Commission exposed appalling behaviour in retail banking and investment management practices. Following the exposure of a breach of trust at financial institutions, a flight of customers veered away from the banks. 

Another banker observed, if banks don’t offer convenience and lower costs, they would eventually be out of business.   

Collaborating to create an ecosystem

An increasingly important practice for overcoming these issues and achieving success is collaborating with third parties and creatin...

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