1: The global banking industry is showing signs of renewed health:

i. Deep capital reserves-Tier-1 capital is at decade-high ~12.6%.
ii. High liquidity: Loan-to-deposit ratio fell to~90%, as comp. to 120% in 2007
iii. Innovation: Investment in digital capabilities & partnerships
2: Banks have taken an axe to costs, yet profits remain elusive (falling ROE and P/B Multiples), leading to depressed valuations.

The unstoppable march of ‘Four Horsemen’ —Disintermediation, Commoditization, Unbundling/Rebundling, and Invisibility— continues.
3: Technology is breaking up traditional value chains into new stacks.

—Traditional Model: Banks vertically integrated. Competition between banks with similar offerings.
—New Model: Modularization. Specialized service providers compete on product innovation and distribution.
4: Forcing rapid changes in playbook & operating models: From→ To:

- Short-term Profitability → Customer Obsession
- Mass Standardization → Mass Customization
- Limited Products →Diverse Products
- Channel Islands → Integrated Ecosystems
- Fragmented Products→Focused UX
5: To succeed, a digital-bank needs to (re)design its operating DNA and build core capabilities around:
6: There are several independent strategies to build a digital bank:
i. Just a front-end, based on the existing core. No own license.
ii. Develop new front-end solutions on existing core and own products.
iii. Front-ends with own modern core banking, own products, and license
7:
iv. Independent bank with own modern core. Proprietary and 3rd party products
v. BaaS i.e. Core banking products offered to the business, FinTechs, Telco& #39;s, No B2C.
vi. Open API’s for 3rd party developers, in order to focus only on core products
8: Neobanks are shaking up traditional banks’ business by offering exciting digital and customer-centric solutions. Digital disruption is the driver. Business-Model is a challenge for many. The jury is out on long-term economic viability and scale beyond early adopter base.
9: Several existing internet co.’s ‘greedily’ expanding into FinTech categories will be disappointed. Success demands a departure from today’s models and competencies to scale new growth models.
10: It helps to critically assess:
—Where to play?
—What network plays to follow?
—How to monetize ecosystem play?
—How to set up critical building blocks?
—How to solve for ‘trust’?
11: New growth models need a new approach, plan for profitability, and network investment. The new tech will create more equality and surplus.
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