This is an excerpt from our contribution to the Mambu Partner Predictions 2022 report.

While the pandemic accelerated the adoption of digital banking technologies, the key driver as we move into 2022 is customer experience. Consumers had a taste of digital banking and they are increasingly coming to expect the multifaceted benefits of digitalization, convenience and cost that well-executed fintech innovation can provide.

With more and more financial companies across the globe looking to satisfy the new demand for a solid framework for digital banking, what does the future hold? Oliver Wyman’s Partner, Dan Jones, contributes his views on one of the top trends: big tech in banking.

Banks or software companies?

Customer expectations, market forces, and competitive pressures have disrupted banks over the last few years, with traditional revenue models focusing on Net Interest Income (NII), and fee and transaction income declining.

More recently, banks have been focusing on platform plays, spanning models of embedded or white label finance and beyond banking ecosystem expansion. As these types of business models grow in maturity, compounded with the rise of “super-apps”, incumbent banks must continuously accelerate their innovation agenda and expand their horizons across new business models.

Banks already have deep capabilities beyond their banking offering and customer base, with individual modules of mature capabilities, advanced technology and software solutions, spanning regulatory, cybersecurity, tech, know your customer (KYC), operations, analytics and treasury capabilities, software, and data.

With both FinTech and Software companies set to sustain a growth rate of 3x the banking industry, it’s time to start exploring alternative ventures to stay competitive.