Every banking leader is unique. But there are several core principles leaders around the world should consider to stay competitive in the new world of finance.
Recommendation #1: Take a longer view on transformation centered on the future of customer experiences and composability.
Building toward embedded, real-time, and open banking capabilities is an iterative process. But leaders can’t afford to wait to act.
Today, 1 in 4 U.S. households are considering switching bank and investment providers or actively looking for alternatives – a 10-year high, according to RFI Global. Those who have changed providers tend to opt into digital-only banks, which offer features like personalized budgeting tools, real-time transaction alerts, AI-powered support, and a better mobile experience.
To reinvent and expand a bank’s role in the lives of its customers, banking leaders must also reinvent and expand their ecosystem to enable open collaboration and orchestration. Whereas previously, banks could demand or operate against customer obedience, CIO teams now need to be customer obsessed. Composability – anchored on infrastructure, business processes, and above all, user experience – enables both active innovation now and greater agility in the long-term.
Recommendation #2: Embrace a holistic data and observability strategy to provide faster, more actionable insights with automation and AI
Cash is no longer king – context is. Observability makes monitoring contextual.
A data strategy that enables observability empowers tech teams to more reliably spot issues, optimize performance, cut costs, and foster innovation, all while helping to ensure a seamless customer experience.
Crucially, observability must span the chip to the stack – every page view, click, and interaction at every level must be considered when crafting, correcting, and even automating experiences that delight customers. While enterprise-wide observability is a must-have, it’s often lacking in hybrid IT environments. While our research shows that 92% of senior leaders say it’s important to have a single dashboard to monitor operations across a hybrid environment, almost as many (85%) find it difficult to implement.
Recommendation #3: Drive a concerted cultural shift with matching governance to enable an effective talent and technical pipeline
Technology tends to be a primary focus for decision-makers, but that’s only one dimension to long-term success.
Earning and keeping your workforce’s trust and buy-in is another. IT is everyone’s business and new processes and tools must be matched with new capabilities. Our research found that nearly two-thirds of banking CEOs are concerned that their IT systems are outdated or nearing end-of-life. The reality of this concern is vulnerabilities, skills gaps (particularly in rapidly evolving areas such as AI/generative AI and cybersecurity), and challenges to modernization.
Reorienting culture, upskilling talent, and upgrading hardware takes time. While those processes are underway, banks should look to fintechs, ecosystem partners, and professional service providers to accelerate workforce and delivery transformation. Outsourcing looks different today. For some banks, that now involves establishing global capability centers (GCC) to augment existing digital, tech, and engineering capabilities, future-proof skill sets, and solidify their competitive position in an AI economy.
Recommendation #4: Offer personalized customer experiences with secure, real-time, and open connectivity
Today, it’s more important than ever that a bank’s digital experience is as good – if not markedly better – than its brick-and-mortar experience.
As a recent J.D. Power survey found, direct banks are outperforming traditional regional and national banks in terms of overall customer satisfaction and support during “challenging times,” particularly among millennial and Gen Z customers.
Another look at recent award recipients shows what client service looks like in practice. In 2024, fintech infrastructure provider Portal took home the “Best of AI in Finance” prize at the Cloud Awards for its AI-powered investing copilot, RAFA. Among its key offerings, RAFA connects seamlessly with custodians like Fidelity and Schwab and provides individual investors with “AI-driven insights, personalized portfolio management, and continuous market analysis.”
Big banks are playing ball, too. Citi’s AI solution, CitiService Agent Assist, won a Pega Innovation award for transforming client service. Agent Assist, first launched as a generative AI pilot, guides customer service teams through client interactions with “procedural information, real-time transcripts, after-call summaries,” and more to save everyone’s time and improve customer outcomes.
Clearly, any investment that enables a bank to partner, innovate, and offer fresh solutions that proactively respond to real customer needs is worth exploring. As a bonus to a bank’s bottom line, personalized solutions delivering real value can be deployed with fee-based revenue models (which are more stable and predictable than interest-based models).
Explore the full strategic guide
In our Strategic Guide for Banking Leaders, Kyndryl examines the trends and disruptions redefining banking and the practical next steps leaders can take to stay competitive. Discover the challenges shaping the future of the industry, the opportunities driving competitive advantage and strategic recommendations for building a more agile, customer-centric and future-ready bank. Read the Full Report.
