Cultivating a digital-native mindset: A blueprint for transformation

“Change is the only constant in life,” said the Greek philosopher Heraclitus. This timeless wisdom resonates deeply in today’s dynamic financial landscape, where banks are grappling with escalating operational costs, growing system fragility, and an inability to keep pace with agile competitors. Decades of investment in technology have resulted in a complex set of systems of different vintages and capabilities. For many established banks, technology has shifted from an enabler to an anchor, particularly in their lending operations.

The solution to this conundrum? If you talk to technology companies – more technology. That’s only part of the answer – a crucial part without a doubt, but only a part. The bigger one is people – or to put it more accurately ‘mindset’. As Henry Ford said, “Whether you think you can or you can’t, you’re right”. The foundations of the right mindset are confidence, optimism and a willingness to try new things. For decades, we’ve been conditioned to think that new things completely replace old things, e.g., most people use smartphones instead of the feature phones they used to use. But therein lies the challenge. Consider bank branches – have they been completely replaced by other channels of engagement? No. Adding new channels, technologies or capabilities doesn’t seem to completely replace the old. When something new arises but doesn’t completely replace something old, the cost of disrupting and replacing everything for this single new thing makes the challenge worse.

There is a better way than total replacement, it’s called symbiosis. This is where next-generation solutions are deployed alongside existing systems offer a compelling alternative to rip-and-replace approaches. Not only do banks get access to new capabilities fast, without disrupting the areas that are not affected, but they can gradually replace everything – if they so choose.

Sounds great, especially at a theoretical level, but let’s consider a practical application. Let’s apply it to lending. Whether it is the entire lending business or a specific area – e.g. mortgages, vehicle lending – with symbiosis the choice is yours.

Strategic vision and competitive advantage

By targeting specific pain points or market opportunities individually, with a rapidly deployed yet minimally invasive symbiosis approach, not only can you move at the pace your business needs but each step forward is towards your strategic vision. No detours, no delays, no disruption. If you need to rollout innovative lending products or expand into a new area of lending or target a segment not previously served, with symbiosis you can do it, without upending the entire apple cart. This phased implementation ensures that the bank can continue to operate smoothly while progressively enhancing its capabilities. Perhaps even better, it allows you to rapidly integrate advanced technologies, such as AI-driven underwriting and real-time data analytics, into your lending operations. As the levels of competitive intensity increase being able to gain a sustainable competitive advantage may be the difference between leading and following. By leveraging the right technology partner with decades of experience in banking and a forward-looking vision, banks can gain a competitive edge, offering innovative lending products and superior customer experiences.

Adapting to rapid technological evolution

The pace of technological change is accelerating. Foundational frameworks, ecosystems and ground-breaking leaps such as those that led to GenAI, bring step changes in technology. Adopting those technologies in a timely, cost-effective manner is challenging, especially when a newer, better technology might arise at any moment. Agility – in mindset, in operations, and in technological infrastructures – is crucial. More targeted lending products can be designed by leveraging the raw information in banks’ vast data stores, combined with demographic changes and other external data sources, to meet the needs of borrowers better. GenAI powered systems can help bankers’ determine where the opportunities lie – perhaps there’s a gap in the market a specific type of loan product, targeted at a segment of Gen Z in a particular area, with specific interests. Rapid product creation systems can be deployed to ensure that market leaders capitalize on fleeting trends. Technology can also help seamlessly embed the products into the consumers’ journey. All these next gen capabilities are available with the right technology, Symbiosis can enable the agility needed to adapt quickly. This agility is crucial for maintaining relevance in a competitive market and meeting the evolving needs of customers. By embracing a digital-native mindset, banks can reimagine their operations, creating a more flexible and responsive infrastructure that can adapt to future technological advancements.

Customer-centric strategies

What does a customer-centric strategy mean for lending? Perhaps it means ensuring that every loan is tailored to meet the unique needs of every single customer. Perhaps it also means that when those needs change the loan changes as well. The challenges of doing this are tremendous but so too are the opportunities it creates. Challenges such as: no more loan product families designed to meet the needs of a wide segment of the market. Interest rates, repayment schedules, collateral requirements, terms, fees – all tailored to every single customer. Using legacy systems and processes, the burden involved in creating these loans is only equaled by the difficulties in maintaining them, to say nothing of the complexities involved in forecasting default rates, profits etc. Technology can help. Automated tools, infused with agentic AI, can help guide customers through the initial sales process and any subsequent amendments. Not only would this reduce costs, but it could be delivered whenever, wherever the customers want. Customer satisfaction would increase as customers see that that being treated as individuals rather than part of a segment. Powerful analytics, supported by AI tools can help ensure that the business of lending is predictable and profitable. Real-time integration with external ecosystems means that new developments, capabilities and regulations can be seamlessly embedded in operating models. The ability to quickly adapt to changing customer preferences and market conditions is a significant advantage in the modern banking landscape. A symbiosis approach puts these capabilities to work, fast.

Navigating the regulatory landscape

Benjamin Franklin famously said, ‘nothing is certain except for death and taxes’. Today that could probably be amended to say ‘nothing is certain except for death, taxes and changing regulation in banking”. A study [1] into the true cost of financial crime compliance found that costs have increased for 98% of institutions, reaching a total of $206 billion worldwide. Little wonder that many bankers, including at the World Economic Forum in Davos [2], have decried the cost of regulation – “look, regulation has been stifling” – said one. The cover to the Feb 1st edition of The Economist [3] is focused on ‘the revolt against regulation’. What this means for the quantum of regulation is uncertain, but change is definitely coming. Agility will be increasingly important to adapt to the changing regulatory landscape quickly and cost effectively. Symbiosis can help banks make the changes needed without disrupting their operations. By partnering with a technology provider that understands the regulatory landscape, banks can ensure compliance while continuing to innovate. This approach allows banks to stay ahead of regulatory requirements, reducing the risk of non-compliance and associated penalties.

Reimagining banking through ecosystems

The concept of symbiosis extends beyond technology integration; it encompasses the creation of a broader ecosystem that includes fintech partners, regulatory bodies, and other stakeholders. By fostering collaboration within this ecosystem, banks can drive innovation and create new value propositions for their customers, especially in lending. This collaborative approach enables banks to leverage the strengths of their partners, enhancing their own lending capabilities and offering a more comprehensive suite of lending services. Fintech partners can provide advanced technologies such as AI-driven credit scoring, real-time data analytics, and automated underwriting processes. These innovations can streamline lending operations, reduce costs, and improve the accuracy of credit assessments. Moreover, collaboration with other stakeholders, can enhance the quality of lending decisions and expand the range of lending products available. For instance, by integrating data from alternative data sources and adopting behavioral scoring bureaus, banks can offer more personalized loan products tailored to the specific needs of different customer segments. This ecosystem approach also allows banks to respond more swiftly to market changes and customer demands. By continuously innovating and adapting their lending strategies, banks can maintain a competitive edge and better serve their customers. Ultimately, reimagining lending through ecosystems not only improves operational efficiency but also fosters a customer-centric approach, ensuring that borrowers receive the best possible service and products. The benefits brought by symbiosis can be amplified in an ecosystem environment.

Key considerations for implementing symbiosis

1. Impact on customers:

The transition should be transparent to borrowers, providing a seamless experience across all lending channels. Ensuring that customer experience is not negatively impacted by the transition is crucial. This includes maintaining consistent service levels and avoiding disruptions during the integration process.

2. Change management:

Securing buy-in from all stakeholders, including executives, lending officers, IT staff, and end-users, is essential for the success of the initiative. Effective change management strategies should be implemented to ensure smooth adoption and minimize resistance. This includes clear communication, training programs, and support mechanisms to help employees adapt to the new lending systems.

3. Long-term strategy alignment:

The symbiosis approach should align with the bank’s long-term strategic goals in the lending sector. This includes enhancing operational efficiency, driving innovation in lending products, and improving customer satisfaction. By aligning the symbiosis strategy with the bank’s overall vision, CEOs can ensure that the initiative supports the bank’s growth and competitiveness in the lending market.

4. Ecosystem collaboration:

Building a robust ecosystem of partners, including fintech companies, regulatory bodies, and other stakeholders, is vital for the success of a symbiosis strategy in lending. Collaboration within this ecosystem can drive innovation, enhance lending capabilities, and create new value propositions for borrowers. By leveraging the strengths of their partners, banks can offer a more comprehensive suite of lending services and stay ahead of the competition.

Conclusion

In conclusion, symbiosis offers a strategic pathway for banks to modernize their lending operations while maintaining stability and minimizing risks. By partnering with the right technology provider, banks can achieve their long-term vision, drive innovation in lending, and secure a competitive advantage in the lending market. Embracing a digital-native mindset and fostering collaboration within a broader ecosystem are key to successfully navigating the complexities of the modern financial landscape. Symbiosis is more than just technology integration; it is a holistic approach to reimagining banking for the future, ensuring that banks remain agile and customer-centric.

¹Lexis Nexis, Forrester Consulting, New Study Reveals Challenges of Balancing Compliance Costs with Rapid Change and Customer Expectations
²Rte.ie, Davos - Banks run Trump 'war rooms' as trade ructions expected
³The Economist, The revolt against regulation