The Industrialization Blueprint: Re-Engineering the Future of Banking and Financial Services

Abstract

Industrialization is a relatively new concept that has entered into the sphere of banking and finance, and consists of the radical transformation of that sector through new high performance banking operations. It involves strategically combining the standardization and automation of none-core operational activities (in order to significantly increase operational efficiencies), with new product and service innovations, and high levels of customer excellence. Industrialization is a strategic imperative touted as a new way to intelligently reduce costs and successfully address the complexities facing banks and financial institutions (BFIs) worldwide. It has been argued that industrialization can help BFIs rebuild asset quality and achieve a sustainable new digital banking business model, in the face of increasing compliance costs, a volatile macroeconomic environment, and continuing negative public perceptions. It may also provide BFIs with new opportunities to restore return on equity (RoE) to pre-crisis levels, whilst attaining sustainable profitability in a low interest environment. This article will investigate exactly what industrialization entails, it will analyze problems faced by BFIs, it will weigh them up against pro-industrialization arguments, and will seek to put forward a new “Industrialization Blueprint” consisting of five underlying “commonalities” (innovation, customer, costs, technology, and operational), which may help BFIs to successfully navigate their way through the current haphazard banking environment into a new era of industrialized banking.