Retail banks are suffering big losses in terms of valuations and productivity due to the current business model. To make the sector future ready credit unions need to think about distribution strategies that will help develop a sustainable business model stated Bahaa Abdul Hussein. It will not only help in catering to a large number of customers but also provide operational efficiency.
Recent trends in the banking sector make certain that traditional organizations can keep up with the changing market. Emerging tech businesses and fintech companies are giving tough competition to old financial establishments. However, to achieve success in the present market there is a need for changing the physical distribution structure, back office methodologies, existing business model, and other value propositions.
Studies have found that business models and geography plays an important role in defining winners in the retail banking sector. In the present time, operation excellence is usually important for ensuring the success of natural organizations and also their sustainability in the coming days.
Every organization is trying to cut down on the cost of delivery services. The perceived value of services in the marketplace is likely to drive market share and growth of the company. Therefore, retail banks will need to implement an advanced platform for everyday operations. Leveraging new technology and other capabilities will support an efficient supply of digital products and services.
Profitability is reduced with a legacy banking structure
Factors that were responsible for the success of legacy banking in the past have completely changed. Now different market trends result in a performance gap between the highly profitable financial organizations.
There is a noticeable difference in terms of the profitability of the financial organization. Factors like outdated business models, lack of new products and services, operational inefficiency, and inadequate product engagement are also responsible for impacting the profitability of a bank. An organization operating in developed countries has found that the existing cost structure is not sustainable. Therefore, it is necessary to implement modern technology to cut down on the cost of distribution, implementation of scalable technology, and management of analytics and data.
Conclusion
Some of the banking agencies are still trying to compete in the digital age with their age-old approaches. In emerging markets like Africa, the Middle East, and Latin America financing organizations need to leverage the profit from core banking facilities. It will give them the need it supports cross-selling and new product expansion.
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