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Case study

A Traditional Bank Pursues Digital in a Nontraditional Way

Our NextEngine approach helped the bank create a “digital attacker” to reach the next generation of retail clients

  • min read

At a Glance

We helped a leading universal bank develop an all-new, digital-only bank, one that is cloud-based and mobile-first. Using our NextEngine approach, we built a complete business model supported by a fresh brand and a cloud-based technology stack designed to capture new markets both at home and abroad.

The Full Story

BankCo* is a commercial bank leader in its home market, with a full suite of traditional banking products and a strong reputation as a safe, reliable institution. Its core retail business caters to an affluent and progressively aging customer base. After a decade of decline in younger segments, this bank turned to us for help in reinventing itself.

Rather than retool its core business, which can be costly, complex and time-consuming, BankCo decided to explore launching an entirely new digital bank to operate alongside its existing operations. Using our NextEngine approach, we designed a radically different entity for BankCo, complete with blueprints for a sophisticated technology infrastructure, a robust go-to-market plan, and a compelling value proposition for millennials. This cloud-based, mobile-only banking platform can complement BankCo’s existing business in mutually beneficial ways.

The platform provides an engine of innovation for BankCo, serving as a testbed for next-generation banking technologies. And it can be replicated in new markets, opening many opportunities on BankCo's horizon.

Our team began with a detailed market assessment that revealed how a new digital bank could complement BankCo’s existing business by attracting young, tech-savvy customers. We demonstrated that BankCo could draw these customers toward its core retail franchise over time as their needs grew more complex. Our research showed the value in developing a differentiated brand, one that would resonate with young people through its informal tone of voice and customer-centric engagement tools.

Next, our multi-disciplinary team outlined the new entity’s operating model, governance structure, and route-to-market. By partnering with a range of third-party providers we designed a mobile-only user experience powered by state-of-the-art payment systems and frictionless customer journeys.

BankCo’s new entity is what we call a “digital attacker” business. Such an entity can serve both offensive and defensive strategies in nearly any industry. On offense, it allows companies to enter a new market with lightweight solutions that undercut established players in terms of cost-to-serve; on defense, it allows them to bid for segments that reject traditional banks – for instance millennials, students and young professionals – who can provide future revenue streams. It also gives BankCo new capabilities for continuous innovation, including a “digital factory” product development team that embraces Agile principles.

In our experience, such a platform can be delivered in nine to twelve months. We estimated that it has a cost base that is 60-70% lower than BankCo’s traditional bank, which has to contend with the twin burdens of legacy technology and branch networks. It provides a new engine of innovation for BankCo, serving as a testbed for next-generation banking technologies. And it can be replicated in new markets, opening many new horizons for BankCo going forward.

We take our clients' confidentiality seriously. While we've changed their names, the results are real. 

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