Something big is stirring in retail banking. Across the world, financial institutions are rolling out a broad array of initiatives that place bold bets on new digital technologies, which they expect will fundamentally change how they attract and retain customers.  

Most banks are investing heavily in apps for smartphones and digital tablets that make it easy for customers to conduct a wide range of banking activities while on the go. Some are developing interactive tools that help customers analyze their spending habits and strengthen their money management skills. Still others are mobilizing the power of social networks to draw “fans” to feature-rich Facebook pages that build their brands and entice consumers to share personal information.

Each of these initiatives marks a major effort to harness fast-moving digital technologies, unrestricted mobile access and vibrant social media to banks’ interactions with their customers. But to a large degree the digital pioneers—as well as banks that have yet to cross the digital Rubicon—are also in a battle for survival as they race to keep up with consumers’ rapid embrace of wireless interconnectivity.   

The challenge is global and gaining momentum as banks try to come to terms with technologies that have transformed sector after sector. Venerable companies like Kodak, the photography pioneer, and Blockbuster, the once preeminent purveyor of video rentals, failed to step up to the digital challenge, spelling doom for their business models as they succumbed to nimble newcomers in faster, lower-cost digital imaging and online video streaming. Innovators like Amazon.com and Apple’s iTunes applied new digital technologies to revolutionize the publishing and music industries, sweeping away long-entrenched incumbents. Closer to home, banks are feeling the hot breath of competition from PayPal, Google Wallet and others whose mobile payments technology threatens to displace banks in consumers’ daily transactions.  

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