We´re witnessing creative destruction of financial services, rearranging itself around the customer

Arvind Sankaran, ex-head of retail banking and wealth management at HSBC

There’s no doubt that banking disruption is an on-going phenomenon. Financial sector has been traditionally controlled by a few large players but now the whole industry is in a state of flux. New financial ecosystems and business models, constantly evolving customer needs, innovative technological solutions as well as PSD2 regulation are all changing the market dynamics in a rapid pace. Simultaneously barriers for new players to enter the market are coming down fast. As the financial market transforms towards business models based on networks and partnerships, new players may start capturing opportunities without the burden of banking license application process or building a core banking system.

In this changing market environment, the main concern for traditional financial institutions is maintaining the contact with customers. PSD2 regulation enables access to customer payment and bank account information for retailers and other third parties, without the encumbrance of a traditional retail bank setup. Thus, the incumbents are under a threat of becoming only back-end providers controlling all the infrastructure but losing active interaction with end-customers. This is an opportunity that retailers should definitely build on.

Retailers are experts of understanding customer needs and despite of the digital transformation have mostly succeeded in maintaining active connections with their end customers. One shouldn’t either forget the importance of consumer trust – trust is an essential element when we´re discussing about personal finances. Major retailers with their vast customer bases and long-lasting client relationships have an upper hand against most of the new entrants to the financial market. And financial market is just not any market. With its vast size – just focusing on a small area of the market may turn out to be a very lucrative business.

A pivotal process in terms of financial applications is the customer check out. Most first-hand financial solutions that retailers could provide to customers are related to payment transactions. There are numerous financial applications that can be built around customer payments from different forms of consumer credit to more complex partnership offerings that create consumer value. In practice, already now retailers handle customers’ financial information when processing payments. Thus, entering into the field of banking is not such a leap as it originally may seem.

In the past, integrating other applications to customer payment process would have been a burdensome task. However, now with the help of rapidly increasing adoption of APIs (Application Programming Interfaces) the implementation process is dramatically more straightforward but still secure.  APIs are one of the key drivers towards ecosystem based businesses and more seamless integration of various services and industries. It is said that APIs are like building blocks: in the right hands, they can be combined in creative manners that go way beyond their originally intended purpose. This development is also taking place in the field of banking: new solutions developed between PSD2-based APIs and existing customer offerings are already now linked in an unforeseen manner to create new and unique customer value propositions.

Disruption within the banking sector has started, but we are in the early stages of this transformation. Now is still an excellent opportunity for retailers to start leveraging the market change. See below our report for detailed insights how retailers could capitalize the ongoing banking disruption i.e. in following areas:

  • Improving the customer experience and strengthening customer relationships
  • Creating new revenue streams
  • Ensuring a foothold in ecosystem economy
  • Leveraging customer data in a more comprehensive manner
  • Capturing efficiencies and cost-savings

We also answer another main question that many organizations are struggling with: how to grasp the ongoing market change and get going?  In this continuously evolving market environment with rapid product cycles, it has become crucial to build a seamless connection between company vision, strategy and new services. Our Strategic Business Design approach helps our customers to understand where the real value for both customers and business lies. By combining strategic thinking and service design we can achieve a real and lasting business impact.

BearingPoint Strategic Business Design framework


Jani Ristimäki, Manager, Digital & Strategy, BearingPoint Finland
Aki Alanne, Manager, Digital & Strategy, BearingPoint Finland
Anttu Ahlberg, Senior Consultant, Digital & Strategy, BearingPoint Finland

  • How retailers can leverage today’s banking disruption 1.54 MB Download