The scope and boundaries of the banking market continue to shift. A decade after the global financial crisis, Irish banks are still dealing with the fallout – remediating core operations, fighting for talent, anticipating new entrants and rebuilding consumer trust. Customers today are less trusting, less forgiving and more demanding than ever before. New propositions and new players in the value chain further exploit this trust gap. From the recent EY Global FinTech Adoption Index, Global FinTech adoption has reached 64% with Ireland (71%), Netherlands (73%) and UK (71%) leading in adoption among developed countries. Regulatory changes are also accelerating the creation of a new banking ecosystem, with PSD2 and GDPR serving as catalysts for an emerging and unfamiliar marketplace. In the face of increased competition, disruptive technology, and changing customer attitudes, banks must evolve their business model and core proposition to succeed in a new digital world.

Heritage processes and infrastructure continue to impede the ability of traditional banks to transform and grow. Providing more connected and digitised customer experiences whilst remediating the past, managing ongoing risk and maximising profits requires a business model that can flex to adapt to evolving needs. Organisational culture and change models must also evolve to support new practices and norms. Agility and change discipline are the new differentiators.

So how can banks design and build an adaptive business model that is fit for the future?

At EY, we use a number of different potential banking models to help our clients consider how best to adapt and thrive:

• Bank as an experience: providing a distinct and superior experience for customers
• Bank as a marketplace: creating a convenient and attractive platform for customers and third parties
• Bank as a service provider: outsourcing critical banking operations and software components to other banks
• Bank as a facilitator: bringing together customers and developers into a single community to boost innovation
• Bank as a producer: providing full end-to-end banking propositions or specific products on a white label basis to other banks

Each of these potential models has clear implications and consequences. Banks need to clearly define their role in the new ecosystem; this will involve case-specific speculation and scenario analysis: what will the relevant ecosystem look like, who are the disruptors, and what are the medium-to-long-term trends in their market(s)?

Whatever shape your future business model takes, it should not be static — you will need to adapt it, again and again, in response to continual evolutionary and disruptive change.

Although the banking industry is at a crossroads, there are clear opportunities to adapt and thrive. EY can support you through your digital transformation to achieve your desired business model. Our deep understanding of risk and regulatory challenges with our knowledge of the latest transformative capabilities can help you to define your future model and map the change journey.  Get in touch.

Explore our NextWave Banking hub which houses our latest views on the decisions banks are facing in order to shape their digital future. In the coming weeks, we will be further exploring these challenges and the associated strategic options and emerging trends. Watch this space.