How legacy banks must evolve, adapt and digitally transform to protect their market share

Legacy banks have earned a comfortable spot in the market, with decades or even centuries of expertise under their belts and trillions of dollars collectively on their balance sheets.  

Despite traditional institutions being regarded as prestigious within the financial services industry, many customers - and especially younger generations like Gen Z - are challenging legacy brands’ hold on the market.  

This digitally native group that makes up one fifth of the world population has now become a vital audience that traditional banks must learn to attract.  

Unfortunately, most legacy banks can struggle to understand their new set of consumers and can’t extract insights about them due to their lack of consolidated data storage in the cloud. Consulting firms such as Publicis Sapient are offering hope to legacy banks by combining the digital transformation firm’s decades of experience in financial services with intimate knowledge about integrating, understanding, and applying emerging technology.  

With more of them entering the market each day, Gen Z’s preferences are redefining the idea of banking. They’ve been shown to be less loyal to brands, deeply concerned about social justice, and financially, they have non-traditional income sources and a strong desire to own a home. But they expect all of this to be easy to use and designed around them - not outdated back-end systems. 

This can cause Gen Z to disengage with legacy banks. Instead, they’re flocking to fintech and neobanks that are more technically agile and offer better perks.  

Although fintechs and neobanks still represent a minority of financial institutions, their presence and value is growing rapidly. These challenger banks are expected to grow at a rate of 53.4% CAGR until the end of the decade. Additionally, the emerging trend of non-financial companies and popular retailers offering banking services represents another threat to traditional providers. The fintech / neobank pool is likely to grow exponentially: Non-traditional players already have up to $10 billion in deposits. 

To guard their spot in the industry and build a more secure future, legacy banks must embrace digital transformation and create brands that have the maturity and trust of incumbent banking brands with the usability and customer-centricity of insurgent startups. 

Experts like Publicis Sapient believe they can help. The firm has over three decades of experience creating digital-centric futures for their customers, while driving enhanced top and bottom line growth. 

Publicis Sapient’s Financial Services Practice has been successful because much of their team are former practitioners with significant industry experience in Wall Street banks, which they have then leveraged to help clients that they intimately understand. They’ve assisted thousands of high-profile clients through their approach based on Strategy, Product, Experience, Engineering, Data and AI. This SPEED acronym is one of the pillars of Publicis Sapient’s methodology to not only integrate tech and migrate data to the cloud, but to revolutionize a company as a whole. 

"Technology is becoming a huge change agent in helping transform enterprises. What Publicis Sapient is trying to do is help banks and anybody in the financial services ecosystem reimagine their business so that they can actually thrive in this evolving environment. Ultimately, if they don't change, they will become a commodity, no different than water or electricity providers," says David Donovan, who leads the firm’s Financial Services Practice. 

As a result of its work building fintech brands for financial services brands and implementing embedded finance capabilities, Publicis Sapient has been named amongst the World’s Best Management Consulting Firms. 

In one case study Publicis Sapient upgraded the customer experience for a retail bank with over 11 million clients. In under a year, the firm developed and launched this institution’s new mobile banking app, maximizing convenience and flexibility.  

By working closely with the retail bank’s employees and customers, Publicis Sapient increased customer engagement, decreased contact center traffic, and pleased over 86% of customers. This result stemmed from the fusion of AI-powered insights, increased cash flow visibility, and bite-sized visual concepts that transparently explained financial processes and enabled better account management. 

Unlike some of its competitors, Publicis Sapient takes a hands-on, product-oriented approach to developing and executing client projects. Instead of promising a perfect product without any client collaboration, the firm frequently improves prototypes and ensures that clients are pleased with product development through feedback at each stage. This agile methodology hinges on the company’s desire to produce platforms and services that equally benefit consumers and banks. 

"Although we aren’t always directly working with our client’s customers, they are always the end users of our solutions; we think about them almost as much as we do about our clients. This allows us to help our clients design products and services that their customers want - not just what they think their customers want” continues Donovan. 

As the landscape of tech within the financial services industry continues to evolve, Publicis Sapient will continue leading legacy banks to brighter futures.  

They plan to further integrate AI capabilities, and educate banks about the importance of centralizing data in the cloud, creating more intuitive platforms and services.  

Those services can satisfy customers who, used to platforms built on a “one-to-one" not “one-to-many" interaction like Netflix and Spotify, are demanding a more personalized and frictionless experience from their bank. 

Logging into your bank account should be as easy, intuitive and rewarding as loading up Netflix, according to Publicis Sapient’s ethos of putting the customer at the center of an immersive, seamless experience.