Concluding remarks
In this chapter we have discussed four digital competencies that banks need to learn to stay relevant in the credit sector of the future: connectivity, decision making, automation, and digitization.
We have also introduced the digital dilemmas that come with those competencies, such as “disrupt or defend,” “cooperate or compete,” “diversify or concentrate,” “separate or integrate digital businesses,” and “buy or sell portfolio companies.” Banks and FinTech companies need to understand the digital dilemmas they face. If they are clear about their options, they will be able to focus on formulating their digital strategy. Even though the five dilemmas here are by no means an exhaustive treatment of all the potential challenges that banks and marketplace lenders face, they are a useful starting point to raise awareness and frame the discussion. With this in mind, the dialogue on strengthening the financial sector will become more focused and actionable.Nevertheless, more important than deliberating about dilemmas in the financial sector— digital and other—is taking first steps towards their resolution. This chapter highlights the dilemmas but stops short of prescribing how banks and marketplace lending platforms should resolve them. No one-size-fits-all approach exists to build the future of credit. Both bank lending and marketplace lending are dynamic sectors that are continually evolving. The challenge to integrate the two is large. Possible approaches to tackle this challenge with digital strategy is the subject of the next chapter.
NOTES
1. King, Brett (2014) Breaking Banks: The Innovators, Rogues, and Strategists Rebooting Banking (New York: Wiley).
2. Broeders, Henk and Khanna, Somesh (2015) “Strategic choices for banks in the digital age” (McKinsey and Company), http://www.mckinsey.com/insights/financial_services/Strategic_ choices_for_banks_in_the_digital_age.
3.
Croxford, Hugh; Abramson, Frank and Jalbonowski, Alex (2005) The Art of Better Retail Banking (Hoboken: Wiley).4. Skinner, Chris (2014) Digital Bank: Strategies to launch or become a digital bank (Singapore: Marshall Cavendish Business).
5. Hawking, Stephen (2000) San Jose Mercury News (January 23, 2000).
6. Broeders, Henk and Khanna, Somesh (2015) “Strategic choices for banks in the digital age” (McKinsey and Company), http://www.mckinsey.com/insights/financial_services/Strategic_ choices_for_banks_in_the_digital_age.
7. King, Brett (2013) Bank 3.0 (New York: Wiley).
8. Fleming, Sam (2014) “George Osborne to reveal shake-up of SME loans” (Financial Times, 5 August 2014), http://www.ft.Com/intl/cms/s/0/14a1ec8c-1cc4-11e4-88c3-00144feabdc0.html.
9. Funding Circle (2014a) “Funding Circle & Santander announce partnership to support thousands of UK businesses” (18 June 2014), https://www.fundingcircle.com/blog/2014/06/funding-circle- santander-announce-partnership-support-thousands-uk-businesses/.
10. Dunkley, Emma (2014) “Royal Bank of Scotland to enter MARKETPLACE lending market” (Financial Times, 19 October 2014), http://www.ft.com/intl/cms/s/0/660447b0-5625-11e4-93b3- 00144feab7de.html.
11. The Economist (2015) “Shredding the Rules: A Striking Number of Innovative Companies Have Business Models That Flout the Law” (The Economist, 2 May 2015).
12. Broeders, Henk and Khanna, Somesh (2015) “Strategic choices for banks in the digital age” (McKinsey and Company), http://www.mckinsey.com/insights/financial_services/Strategic_ choices_for_banks_in_the_digital_age.
13. Ibid.
14. Groenfeldt, Tom (2014) “BBVA Makes Banking Simple” (Forbes, 7 March 2014), http://www.forbes.com/sites/tomgroenfeldt/2014/03/07/bbva-compass-makes-banking-simple/.