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Fintech

Banks need to challenge fintechs by playing the same game

Greenfield start-ups embedded within the core business might be the best way for banks to address their legacy infrastructure problem.

RBS-London-Bishopsgate-300

For many large banks, the greatest challenge they face is how to unshackle themselves from their legacy infrastructure and move forward using new, customer-centric technology.

In a new report titled ‘Time to start again’, consultants Oliver Wyman explain that the challenges from new non-bank trading businesses, digital neo-banks and the likes of Amazon and Apple mean that banks now need to look at how to combine new-build businesses with their existing business models.

The report suggests that the best method is to take a greenfield venture capital approach, setting up a separate organization – with investment provided in stages – that has the freedom to operate independently from the rest of the organization and deploy new technology.

Oliver Wyman has worked with RBS on just such a project: its digital bank Bó.

“Bó represents a new breed of financial institution – a greenfield digital bank owned by an existing incumbent,” Bó CEO Mark Bailie told the report’s authors.

“We knew the kind of outcome we wanted would be a long and hard journey for an incumbent bank to deliver, with product-centric legacy infrastructure.

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