The bank of the future

Thought Leadership 5 minutes to read

Kim Fournais

Co-Founder & CEO of Saxo Bank

Summary:  To be truly competitive in this fast-moving world, banks need to put their customers first and re-think their IT strategies in order to address new competitive pressures from tech giants. This is why white-label technology partnerships make such sense.


The downfall of banks has been predicted several times throughout history. In the 1990s it was said that “banking is necessary, banks are not” and for banks these gloomy forecasts have gained renewed traction in recent years. Fintechs delivering a relevant and razor-sharp digital customer experience make banks look dusty and foot-dragging. At the same time, tech giants such as Apple, Tencent and Alibaba are moving rapidly into areas usually associated with more traditional financial institutions. 

Most banks are late to the digital party. That is obvious to everyone. Yet, despite the evident challenges, the rumours of the bank’s demise are greatly exaggerated. If banks have the courage to make the right decisions, they have a bright future ahead of them.

In our opinion, to be successful the bank of the future builds on a foundation of long-term win-win and putting clients at the very core of its operations. The future belongs to banks who acknowledge that the rising digital demand from clients is not met by simply expanding an ever-growing IT department. lncreased expectations for digital experiences from clients and the many opportunities that new technology provides call for an open business model with a sharp focus on the bank’s core strength – servicing clients.

Most banks have been accustomed to building their own systems to cover large parts of the value chain to meet the opportunities and challenges faced by digitalisation. That is why most banks today develop in essence the same technology and digital solutions. It is highly inefficient for everyone to do the same and a foolish race to participate in. Only one can be the best, so why not leverage the services offered from the best providers instead of developing them in-house?

This old model is clearly not sustainable long-term as studies have shown that roughly 80% of annual IT budgets at European banks are used solely to run and maintain legacy IT systems. This leaves few resources for real innovation and meeting the fierce competition from fintechs and the tech giants. 

From our point of view, the bank of the future does not develop much technology itself. The bank of the future helps its clients navigate through the increasingly complex world of apps and smart fintech solutions by handpicking the best solutions and packaging them effectively. By adhering to this platform or marketplace model, banks can build a low cost, flexible and state-of-the art client experience. The flexibility of having an open model makes it easy to add new services, without adding high costs and complexity.

For banks, their core competency is to service clients. However, the client focus is all too often shifted by an outdated IT infrastructure. In a time dominated by flexible technology and cloud solutions, it does not make sense that many banks still rely on old mainframes. 

When a bank switches to a more open model, it not only gets the benefit of more flexibility but also lower costs. The bank also creates a much stronger foundation for building long-term win-win. Operating as an open platform removes any incentives in promoting one’s own products and services, which many banks do today, and lays the foundation for truly putting the clients’ interests first which, in our view, is the clear precondition for long-term success. 

Those banks who dare to take the leap from developing technology in-house, to become truly open banks operating as marketplaces or platforms, have a bright future. Indeed, with the advent of cloud-based solutions, that future is not that far away.

In 2001, Saxo Bank signed our white-label partnership for a bank to use our technology to better service their customers, and we have argued for a long time that partnerships are the future of the financial sector. The development has not moved as quickly as I expected, but it is certainly accelerating. More banks are starting to understand that outdated IT infrastructure is the biggest obstacle and that they no longer have to develop their own technology. It is simply too expensive, especially with increasing regulatory requirements, and the world is moving too fast.

Banks have a strong opportunity to compete against fintechs and the big tech companies as they have the resources and large, loyal customer bases, but theses strong foundation can easily crack if they insist on building their own systems, products and solutions.

The winners will be those who focus on delivering an experience tailored to the needs of the individual client. This can only be achieved by collaborating with specialist partners, each of which can supply the sub-elements that together form a razor-sharp and unique client experience at the lowest possible cost, putting the clients’ interests first.
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