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For many large banks, the greatest challenge they face is how to unshackle themselves from their legacy infrastructure and move forward using new, customer-centric technology.
In a new report titled ‘Time to start again’, consultants Oliver Wyman explain that the challenges from new non-bank trading businesses, digital neo-banks and the likes of Amazon and Apple mean that banks now need to look at how to combine new-build businesses with their existing business models.
The report suggests that the best method is to take a greenfield venture capital approach, setting up a separate organization – with investment provided in stages – that has the freedom to operate independently from the rest of the organization and deploy new technology.
Oliver Wyman has worked with RBS on just such a project: its digital bank Bó.
“Bó represents a new breed of financial institution – a greenfield digital bank owned by an existing incumbent,” Bó CEO Mark Bailie told the report’s authors.
“We knew the kind of outcome we wanted would be a long and hard journey for an incumbent bank to deliver, with product-centric legacy infrastructure. So, for us, the question was, how long have we got?
“If it is 10 years, you can probably transition the existing core into a truly customer-centric business, because you can do almost anything in 10 years if you are good and you can execute – and we still have a Plan A around this.”
