Banks that layer “non-linear” or “adaptive” business models on top of a traditional, vertically integrated model could see additional annual growth rates of up to 3.8%—or $518 billion in revenue—by 2025, according to a new report by Accenture. The report defines businesses that embrace adaptive businesses models as “‘packagers’ that assemble new propositions, adding value beyond just distribution; and firms that embed their propositions into third-party services.” (Firms with “traditional” or “linear” business models, meanwhile, are those that sell only their own products or distribute products from other providers.)
“To capture growth, traditional banks need to go beyond becoming the best digital versions of themselves and become adept at operating multiple business models simultaneously,” said Accenture Managing Director Dilnisin Bayel. “This will require that they shift their perspective to consider adaptive models that put product innovation, embedded distribution, purpose, and sustainability at the forefront. Banks can choose to continue to innovate at their current pace or take a fast-follower or leader approach to business model transformation—but they can’t afford to remain stagnant.”
Bank executives recognize the need to rethink the traditional business model. Accenture found that 92% of those surveyed said that they would be willing to operate more like “broad federations of businesses in response to market fragmentation” in order to succeed in the future. The report outlined several possible approaches that banks could embrace, depending on size, market and strengths, to differentiate themselves—including selling only its own products and controlling all layers in the value chain; building a distribution-driven ecosystem; selling bank capabilities as a service; or creating new propositions by building or bundling fragmented “micro-products” or services.