Mckinsey case bank. In this case study, we look at how Banco de .

Mckinsey case bank Second, the bank developed a rollout plan for implementing data architecture and governance in three to four data domains per In this interview, conducted by McKinsey’s Joe Ngai, the deputy CEO of Ping An, Jessica Tan, about 35 to 40 percent of our new financial-services customers—people who open a bank account or buy an insurance product—have been users on our platform who are new to Ping An and hadn’t previously purchased any products. In the second chapter of this report, we examine evidence — except banking valuations. In this post, we offer an overview of potential quantum computing use cases across business units in financial A recent McKinsey survey of 420 US consumers with credit delinquencies shed light on the various causes of nonpayment. They increased their quality-assurance scores by 13 percent on an absolute basis, improved their customer experience by reducing the number of customer outreaches per case by 18 percent, and they enhanced productivity by increasing the number of cases Interestingly, McKinsey research reveals the digital preferences of older Western European consumer cohorts (ages 51-64 and 65+) aligning for the first time with those of younger demographics for most banking services Access the MBB Case Bank for a comprehensive collection of consulting case studies. For global banking, McKinsey estimates that AI technologies could potentially deliver up to $1 trillion of however, have struggled to move from experimentation around select use cases to scaling AI technologies across the organization. It concluded that only half the opportunity (measured by the automation business cases completed on each manual process) could actually be captured. Situation description Beautify is a global prestige cosmetics company that sells its products mainly inside high-end department stores such as Harrods and Shanghai No. The global bank worked closely with QuantumBlack, AI by McKinsey, to build, test, and launch a bespoke customer-facing chatbot that uses the latest gen AI technology to meet Learning by yourself is an essential first step. In 2023, this spending totaled $650 billion, 1 2024 Enterprise IT Spending Forecast for Banking and Investment Services, Gartner, 2023. Against this deeper understanding of the sources of customer experience, the team was then able to put in place Philippine banks devote less than 10 percent of their revenues to IT, compared with an average of about 15 percent among incumbent banks elsewhere in Asia–Pacific, and digital channels account for just 5 to 15 percent McKinsey research suggests that by 2025, these numbers will be closer to 25 and 40 percent, respectively. In some cases, a bank will need to create new roles, such as tribe leaders and agile coaches. We recommend you make full use of the free prep resources on our consulting blog and also watch some mock case interviews on our YouTube channel. That way you can see what an excellent answer looks like. For this first episode—taken from a new occasional series from our Payments Practice on payments and fintech—our New York-based senior partner Vijay Mckinsey case collection part 2 - Free ebook download as PDF File (. 6 trillion worldwide, roughly doubling from an estimated $26. As global head of Goldman Sachs’s technology division, Don Duet has led the development and execution of the firm’s private Client bank interviews 6. Banks face As a case in point, a large North American bank established an innovation factory to redesign critical banking processes and The future of CX,” McKinsey, February 24, 2021. Yet these vendors can underestimate the complexity of the requirements, investing too much time and money in tech without considering whether it meets specific business needs. We asked these executives about their organizations’ adoption of gen AI, its current use cases, Such is the case for a Latin American bank—whose customer-experience strategy over a two-year period produced a double-digit improvement in profitability per client and customer acquisition while reducing Dilip The digital revolution in banking has only just begun. Men still make up most of the management ranks at banks and insurers. The nature and direction of these changes, how-ever, remains unclear in many cases. Much of the industry’s growth will come from fee-based All-in-one platform for McKinsey, BCG & Bain consulting interview prep with structured courses and 10,000+ practices to land offers. McKinsey has helped the IMF and the World Bank craft policy to meet their evolving roles in the world economy. 3 McKinsey Open Banking Survey Research, UK, October 2018, completed by 950 small enterprises (1-50 employees) and freelancers. 1 See Ian De Bode, Matt Higginson, and Marc Niederkorn, “CBDC and stablecoins: Early coexistence on an uncertain road,” McKinsey, October 11, 2021. 2 McKinsey Panorama Global Banking Pools. 2 “Transformational partnership creates a top For today’s data and technology leaders, the pressure is mounting to create a modern data architecture that fully fuels their company’s digital and artificial intelligence (AI) transformations. The McKinsey Global Institute (MGI) estimates that across the global banking sector, gen AI could add between $200 billion and $340 billion in value annually, or 2. The past two years have been the best for banking since before the global financial crisis (GFC) of 2007–09, with healthy profitability, capital, and liquidity. A landmark McKinsey Global Institute report finds that $12 trillion could be added to global GDP by 2025 if the gender gap is narrowed. In this case study, we look at how Banco de Crédito del Perú (BCP), is using data, AI, and analytics to transform its culture and Peru’s banking industry. 1 This paper argues that the time is right for banks to step up their efforts SOURCE: McKinsey Global Banking Pool (GBP); IMF Financial Access Survey; Honohan 2008; McKinsey analysis Growth 2010 –151 2015 DBS Bank Chief Information Officer David Gledhill shares his insights on DBS’s digital transformation with McKinsey’s Vinayak HV, a partner in the Singapore office. , remortgage at better terms). Gökhan Sari, leader of McKinsey’s Financial Services and Risk Practices in Africa, Eastern Europe and the Middle East, examines how generative AI can generate value in the banking and financial services sector and outlines three distinct use cases. The compliance deadline of Matt Cooke, McKinsey: From McKinsey’s Banking & Securities Practice, I’m Matt Cooke, and this is Talking Banking Matters—new, short audio content for leaders in banking, securities, and beyond. Case study: CP AXTRA Public Company Limited. McKinsey estimates that for the top 12 banks, the capital-markets revenue benefit of a better architecture could amount to as much as $200 million a year, thanks to improved cross-selling, faster and smarter Using advanced-analytics models to monitor behavioral patterns among 20,000 employees, the bank identified unwanted anomalies before they became serious problems. In this case study, To scale up capabilities, McKinsey aided DBS in building its new operating model around platforms. 4 Database on Indian The trusted and tested correspondent bank-ing approach has encountered challenges from emerging alternative solutions and new players upending some of the industry’s fundamentals. As an example, one North American bank used a combination of tools, including fuzzy logic and Google May 4, 2020 Core transaction processing engines for banks—or “core banking systems”—have been making news in the world of banking technology of late. In addition, some of our corporate partners granted some great original cases that have been used in real interviews. 1 The context for the 2016 survey is the regulatory environment for risk data aggregation and reporting defined by the Basel Committee on Banking Supervision regulation 239 (BCBS 239). The need for superior speed and agility continues to push banking and securities organizations toward cloud adoption. Retail banking’s hesitation on blockchain contrasts with efforts seen elsewhere. The bad news is that change is coming whether or not banks are ready. For their part, banks are clearly motivated to provide broad-based state-of-the-art support for commercial banking functions that generate over $550 billion in annual revenue, according to McKinsey’s Global Payments Map. McKinsey’s Badrinath Ramanathan talks to Peterjan van Nieuwenhuizen, Bank Jago’s director of digital banking, about how the company Until a few years ago, US regional banks enjoyed comfortable incumbency in their regional markets, with modest expectations from customers in terms of their banking experience and loyalty based on a relationship-banking This value comes from improving existing processes and from use cases that could change the financial system. They outline the new challenges banks are facing and suggest how leaders can address those challenges. I think the logic is compelling, and there are a number of areas where a banking service can be nicely integrated into e-commerce. No one can draw a blueprint of what a bank’s risk function will look like in 2025—or predict all forthcoming disruptions, be they technological advances, macroeconomic shocks, or banking scandals. It can then work through a set of five steps: Amit Garg is a partner in McKinsey’s New York office, Davide Grande is a An emerging best-practice model for compliance in banking needs to rely on three core principles to address these challenges. Losses were reduced by 20 percent Digitization will change the traditional retail-banking business model, in some cases radically. Notably, Interview - McKinsey Quarterly. g. Discover the latest McKinsey insights and articles on generative AI, learn and successful case studies 4. 1 This paper argues that the time is right for banks to step up their efforts SOURCE: McKinsey Global Banking Pool (GBP); IMF Financial Access Survey; Honohan 2008; McKinsey analysis Growth 2010 –151 2015 Anna Güntner is a consultant in McKinsey’s Berlin office, Konstantin Lucks is a consultant in the Munich office, and Julia Sperling-Magro is a partner in the Frankfurt office. Other banks will find it better for the unit to be entirely market-focused, drawing upon the core bank for support. But there’s now a The bank’s hierarchical culture, silo mentality, and lack of psychological safety were preventing this ambition from being realized. It is not always the case that credit spread volatility is directly correlated to credit The new consumer bank has paved the way for the parent bank to adopt the modern technology stack and agile operating model over time. 1 Formerly Digital Currency Electronic Payment or DC/EP. If reimagined customer engagement is properly aligned with the other layers of the AI-and-analytics capability stack, it can strengthen a bank’s competitive position and financial performance by increasing efficiency, access and According to McKinsey Panorama, global banking revenues are expected to rise by 9 percent a year through 2025, with corporate clients at the heart of this growth. The authors wish to thank Dania Dialdin, Benjamin Marchal, Magdalena Smith, Victor Surkov, and Tassilo Wanner, as well as the leadership of McKinsey’s Organization Practice, for their Mobile money systems offer a dual promise, as an engine for financial inclusion and as an emerging market business opportunity for providers. Today we are in phase one, where most traditional banks offer their customers high-quality web and mobile sites/apps. Uptake of this convenient technology now far outpaces that of credit cards in the As banks think about how to design and build a highly flexible and fully automated decisioning layer of the AI-bank capability stack, they can benefit from organizing their efforts around four interdependent elements: (1) Our analysis, along with cases from economies at all stages of development, suggest ten powerful ideas focused on resilience, Singapore, Thailand, and Vietnam, from World Bank data and McKinsey analysis. Effective ecosystems offer interconnected, cross-sector services, In 2016, European Union regulators first pushed to create open financial data, laying the foundation for market development. 1 The economic business case from the hype and greenwashing. 2. In 2000, the roster of the world’s 30 most valuable banks included eight American, 14 European, and just 4 Asian institutions. However, in many cases there is a disconnect among the use cases defined by busi-ness units, the broader goals of the organization, Several banks have already launched voice-activated assistants, including Bank of America with Erica and ICICI bank in India with iPal. 20,000+ users trust CaseBasix online tests & courses! Try our Online Tests & Courses for FREE! McKinsey Solve Game: Ecosystem Building, Redrock Study. 2 billion on anti–money laundering (AML) controls alone in 2017. In the case of retail banking, profit pools are large and attractive, but banks have historically had to cope with high barriers to entry (for example, high fixed costs and a need for trusted consumer brands) and long paths to reach breakeven points. Banks should begin this far-reaching initiative by translating the AI-first vision into an enterprise strategy that merges technology with business, funding investments in innovation with the returns on incremental changes in technology. McKinsey & Company Return on equity at or below cost of equity Return on equity 2 3% above cost of equity Slightly below GDP growth, with volume McKinsey Working Papers on Risk. the new revenues can help make the business case for the next-gen system. However, customers started withdrawing deposits in 2023 amid increasing market volatility due to rising interest rates, credit In 2016 McKinsey and the Institute of International Finance (IIF) conducted their fourth Global Risk Data and Technology Benchmarking Survey. To do so, they will need computing platforms that provide greater agility at lower cost. 1 Federal Reserve Bank of St. BCG Tests: Casey Chatbot, Pymetrics Test, Consulting Career Assessment, If you don’t want to spend hours searching the web, this article presents a comprehensive and convenient list for you – with 35 example cases, 16 case books, along with a case video accompanied by detailed feedback on tips and McKinsey has discreetly been an advisor to governments around the world on diverse issues. Over time, the bank developed more than 200 use cases, adding them to a common asset library and sharing playbooks with lessons learned. By using many variables to better identify self-cure accounts, banks can increase collector capacity by 5 to 10 percent, November 15, 2019 For almost a decade after the financial crisis, M&A activity in the US banking industry remained limited, as many banks wrestled with challenging integrations and “shot-gun” combinations. org. Leading AI adopters (those that attribute 20 percent or more of their organizations’ For global banking, McKinsey estimates that AI technologies could potentially deliver up to $1 trillion of however, have struggled to move from experimentation around select use cases to scaling AI technologies across the organization. McKinsey research suggests this is because simplification attempts are too narrowly focused. Despite this In the face of accelerating deposit flows, McKinsey research shows that bank risk management and funding performance has been highly variable. In this case study, we look at how Banco de data & analytics, cyber risk, etc. The Great Banking Transition The Global Banking Annual Review 2023 October 2023 Reinhard Höll, Asheet Mehta, Brian Weintraub, and Eckart Windhagen, representing views from McKinsey’s Global Banking Practice. Reasons include the lack of a clear strategy for AI, an inflexible and investment-starved technology In “Fraud management: Recovering value through next-generation solutions” (McKinsey on Payments, June 2018), our colleagues identified three concrete steps to effectively redefine fraud operating models to fight these emerging threats: re-engineering fraud case management; redesigning journeys to improve the customer experience; and employing Digital-banking start-up N26 has been able to grow rapidly by setting a bold vision, We started as a team of two in our living room in Vienna and knew every tab and cell of our business-case spreadsheet. 9 “McKinsey’s Global Banking Annual Review,” McKinsey, December 1, 2022. Guillaume, With this in mind, we moved to simple, prepackaged offers that Banks can consider seven steps to help them retain and strengthen deposits as interest rates stay elevated and corporate clients Article. Reasons include the lack of a clear strategy for AI, an inflexible and investment-starved technology The new self-cure model based on machine learning and big data can save collectors a lot of time. McKinsey Insurance leaders and other experts help you navigate the challenges of a fast-changing insurance landscape and inspire Get to know and directly engage with senior McKinsey experts on central bank digital currency (CBDC) Vinayak HV is a senior partner in McKinsey’s Singapore office and leader of McKinsey Digital in Asia–Pacific; James Manyika is a senior partner emeritus in the Bay Area office, where Marc Singer and Olivia White are both senior partners. Banks need to use MRM in a more strategic and fundamental role, as banks move proactively to manage their portfolios of models. Financial performance: Indian banks have led with healthy credit growth of around 10 percent over the past decade, with higher ROAs than global peers that have resulted in a valuation premium. They differ in that a digital currency issued by a central bank is legally a unit of In the case when several helpful answers arose, gen AI can be incredibly powerful in creating a better customer experience while also prioritizing the security of banking customers,” says McKinsey senior partner and co-leader of the Global Banking and In this ESG report, we look at some of the key highlights that McKinsey completed in 2023 to create a more sustainable, inclusive, and growing future for all. This article represents the collaborative efforts of the core technology transformation service line of McKinsey’s Banking Practice. But even though banking is the single largest profit-generating sector in the world, the market is skeptical of long-term value creation and ranks banking dead last among sectors on price-to-book multiples. BCP brought in McKinsey to help map out and implement a digital For global banking, McKinsey estimates that AI technologies could potentially deliver up to $1 trillion of however, have struggled to move from experimentation around select use cases to scaling AI technologies across the organization. In McKinsey’s experience, case-management systems deliver full value only when they can integrate effectively with the various systems used to investigate disputes—fraud prevention, ATM, and transaction history McKinsey has seen banks in which 10 percent of dispute outcomes were incorrect (both in favor of and against The most advanced market application of CBDC to date has been the People’s Bank of China’s (PBoC) multicity pilot of its digital version of RMB, called eCNY. txt) or view presentation slides online. And banks like Ping An have been able to create an ecosystem of activities outside core banking—they own a housing company and a car dealership. Our capabilities are bolstered by unique, data-driven, and proprietary solutions supporting clients throughout each ESG journey. Prepare effectively for your interviews with top-tier CaseBasix is the Only Consulting Prep Program that offers all McKinsey BCG Bain Online Games & Tests and offers Self-Paced Learning content and targeted drills to give you an Unfair Advantage in For example, lithium and nickel have a high probability of supply constraints by 2030, particularly in the Further Acceleration and Achieved Commitments scenarios discussed in McKinsey’s Global Energy Perspective Instead, banks should apply a use case–driven approach to introduce new ESG capabilities in the right sequence at the right time. When it comes to blockchain, however, they have remained mostly on the sidelines. Jerome Königsfeld is an associate partner in McKinsey’s Cologne office, and Lukas Salomon is a consultant in the Berlin July 31, 2019 Big banks have long wished they could scale their operations as efficiently as global technology companies, but the technology legacy and multiple local jurisdictions have made this nearly impossible. McKinsey: Both of you have mentioned the relevance of the digital shift. This is the value we can offer both customers and banks. A live demo of the joint solution, highlighting strategies for implementing risk controls, ensuring reliable We shared a live demo of a customer-facing agent conversing with different customers at a large bank, This is an ultimate guide to preparing for a McKinsey case interview. A recent survey by McKinsey shows there is a meaningful and growing appetite among American consumers for climate-linked financial products—but consumers need further education and advice to make informed buying decisions, and providers need to differentiate themselves from the pack. Globally, financial-services revenues have grown 4 percent annually over the past ten years (thanks largely to growth in emerging markets), and fintech start-ups and large tech companies have so far captured only tiny slivers of market share. The greenfield bank, including marketing platforms, was built in roughly nine months for less than $20 million. 6 The technology transformation described in this and other articles in our series on the AI bank of For global banking, McKinsey estimates that AI technologies could potentially deliver up to $1 trillion of additional value each year. January 25, 2024 - Inefficiencies and costly errors continue to plague syndicated-loan operations. The bank chose its 50 most critical teams, including the group executive committee, certain country leadership teams, functional leadership teams, and some high-priority cross-functional teams. In that world, achieving long-term differentiation with BaaS will be difficult, so banks will continue to distinguish themselves based on products, rates, reach, and other dimensions. 32 Patricia Bingoto, Michel Foucart, Maria Banks that increased end-to-end KYC-process automation by 20 percent saw a triple benefit effect. 3Estimated on basis of RBI’s report on macroeconomic impact of Client bank interviews 6. North American banks’ price-to-book ratio at midyear was more than 30 points higher than that of European banks and 15 points above that of Asian banks. com). 2For Q2 and Q3, estimated on basis of Reserve Bank of India (RBI) monthly reports on sectoral credit and annual report with bank liabilities and assets. Leaders can identify and prioritize specific ESG use cases, create clearly defined stage gates, and collect metrics to In many cases the regulator is supportive of such efficiency. Start Free Today! Skip to Case Question Bank. These benefits come on top of benefits from pooling cash-counting centers. The momentum toward open banking models is clear, The advent of the consumer-centric Internet in the early 2000s created valuable new use cases for APIs. Banks would be wise to re-examine their geographic footprints—in terms of the location of branches Subsequent use cases sought to allow customers to stop and start an application with different devices. From late 2019 the PBoC began to pilot test eCNY in Shenzhen, Suzhou, Xiongan, and Chengdu, initially through app and wallet-based payments. This article was originally published in the Financial Times on October 25, 2013 (ft. How to Answer "Why Consulting?" Trusted by many The most direct path to success is to target profit pools in specific businesses of the universal banking model—daily banking (deposit accounts, payments, and credit cards), navigating life events (with complex lending site, one of the leading online shopping malls in China. Learn what to expect from each round and prepare with free resources and practice tests. and According to a 2021 McKinsey survey, 70 percent of the respondent banks in North America (NA) are aiming to include cyber risk model types into the scope of MRM governance. Banks should also create “chapters” as cross-squad groups of employees with similar functional competencies to ensure growth of expertise and cross-training of colleagues across technologies. The bank "His Earlship Charles", This will allow you to filter for interviewer-led (as used by McKinsey) and candidate-led cases. In the former case, the need for specialization extends to the support functions; these people too need a deep understanding of workout so that they can provide structuring advice from a risk, accounting, and funding perspective. To gain material value from AI, banks need to move beyond experimentation to transform critical business areas, including by reimagining complex workflows with multiagent systems. In this interview with McKinsey’s Deepak Mahadevan, ING Netherlands chief information officer Peter Jacobs and Bart Schlatmann, who, until recently, was the chief operating officer of ING Netherlands, explain why the bank needed to change, how it manages without the old reporting lines, and how it measures the impact of its efforts. The digital reinvention of an Asian bank. 6 percent return on tangible equity they made a convincing case that their aspiration wasn’t merely Tech-forward strategy. 8 trillion in 2010 and accounting for 46 percent of overall deposits. The third article, “Life-centric banking with an analytics edge,” looks at the nuances of AI banking in Indonesia. Article. Two billion individuals and 200 million small businesses in emerging economies today lack access to Past McKinsey research has found that shortages of many minerals used in making EV batteries, wind turbines, and other low-emissions technologies could begin before 2030, caused by rapidly growing demand from the transition and the long time it takes to bring new mines on line (five to 15 years, in some cases). A 2016 global McKinsey survey found that a number of common obstacles are holding financial institutions those data domains that included it. In this case study, we look at how Kiwibank, the largest New Zealand-owned bank, Working with McKinsey, The global bank worked closely with QuantumBlack, AI by McKinsey, to build, test, and launch a bespoke customer-facing chatbot Grupo Mariposa: Harnessing connected technology in the LatAm food and beverage market Advanced analytics in banking has evolved con-siderably in the last few years. Tokens can represent a broad range of assets, including physical assets such as real estate or art; The banking industry generated more than $6. DBS’s digital transformation. The Consumer Financial Protection Bureau (CFPB) has proposed rules that would allow third parties to access financial data held at banks, with customer permission. But many have encountered major roadblocks along their path to cloud or gotten cold feet once its impact on costs, security, latency, and McKinsey benchmarking data show that top-performing banks in Western Europe generate more than 30 percent higher revenues per SME customer than average banks, In these cases, the concept of “relationship banking” is a somewhat hollow promise, as banks end up relying heavily on standardization, system-supported decisioning, This bank then did some due diligence to determine whether there was a viable business case to automate each process within a reasonable time frame. 30 Jacob Faber and Terri Friedline, The racialized costs of banking, New America, June 2018, newamerica. 6 “Bank of America is first in industry to launch virtual reality training program in nearly 4,300 financial centers,” Bank of America, experience. For each use case the bank is considering, it should start by asking what problem holds back the business from having a greater impact. In a typical case, the use of a behavioral approach achieved a twofold benefit at one bank. By requiring banks to provide other qualified payment-service providers (PSPs) connectivity to access customer account data and to initiate payments, PSD2 represents a significant step toward In many cases, banks choose a tech vendor based on price rather than the vendor’s banking industry knowledge and experience with a CBS. Phase two: Moving to the next level of the model-risk-management journey. One is how we digitized to the core. 2 The future of bank risk management. 3 trillion, corporate and commercial banking accounts for a significant share of total global banking revenues (Exhibit 1). com. As online spending soared during the COVID-19 pandemic, wallets saw a surge in newly registered users. The future of bank risk management 3 In certain cases, banks may even be obliged to inform their customers if they could switch to a product that better suits their needs (e. ² Many banks, specific use cases, an increasing number of banking leaders are taking a comprehensive approach to deploying advanced AI, and embedding it across the full lifecycle, from the Over the past few years, global technology spending in banking has been increasing 9 percent a year, on average, outpacing revenue growth of 4 percent. In 2018, the World Economic Forum noted that fraud and financial crime was a trillion-dollar industry, reporting that private companies spent approximately $8. McKinsey has been asked to investigate and assess the possibility of using the Diconsa network to provide a set of basic financial services to supplement the limited number of state-owned bank branches. Carla Ioshiura is an associate partner in McKinsey’s São Paulo office; Adrian Murphy is a partner in the New York office, where Maxence Vancauwenberghe is a partner; Bryan Richardson is an associate partner in the Vancouver office; Sebastian Scheurle is an associate partner in the Frankfurt office; and Eric Schweikert is an associate partner in the Washington, Bank of America has launched an immersive training program using VR for every financial center in its network, teaching bankers how to strengthen relationships with clients, navigate difficult conversations, and practice empathy. ), and we expect that in the coming years, sustainability will become a vital element of a competitive GTB offering. which is roughly the GDP of Belgium or Sweden. This post will give you resources to learn about the format itself and 29 real case examples from leading firms like Can you solve this McKinsey case study? It's a case in the financial services industry involving a decision by a big bank. In this case study, we look at how Singapore-based DBS Bank, is reaching a new generation of tech-savvy customers by transforming digital banking. The CFPB proposal seeks to address data-privacy advocates’ concerns about third-party access and potential misuse of the In retail banking, simplification attempts frequently fail to generate significant performance improvements. Banks that understand this dynamic can develop interventions to change it. Some of the major global banks have announced partnerships with new cloud McKinsey research shows that banks are taking a range of approaches to balancing delta EVE against delta NII in various rate scenarios. Meaningful benefits flow through when simplification efforts are designed, implemented and sustained on a broad scale. ) as the enabling engines. The cases for change are in fact diverse and Source: RBI; McKinsey analysis 1In the Indian numbering system, a crore is a unit of measure that denotes 10 million. One possibility is that banking as a service and API banking become as ubiquitous as online or mobile banking, a channel that every bank must build and maintain. The crimes themselves, detected and undetected, have become more numerous and costly than ever. According to a recent McKinsey survey, 65 percent of financial-services businesses that made business building a top-five priority saw revenue growth above that of their competitors. Bank economics model Case studies 54 References 58. Between 2021 and 2023, the best-performing US and EU banks saw interest rate expenses rise 70 percent less than at the worst-performing banks (Exhibit 1). In just two months, digital adoption vaulted five years forward amid the COVID-19 crisis. On the other hand, 38 percent of McKinsey brings a unique approach to ESG focused on value creation that involves benchmarking, strategy development, initiative design, program execution, investor and external communications, and reporting. At McKinsey, case interviews often follow the interviewer-led format, Capital One is the odd one on this list – it is a bank-holding company. One large bank moved to a product-centric model and made far-reaching changes in the Despite the headlines about digital disruption in financial services, big banks are actually holding their own. Louis; IHS Global Insight; McKinsey Panorama—Global Banking Global Banking & Securities AI-powered decision making for the bank of cases where AA/ML models can add the most value, they can automate more than 20 decisions in diverse September 2020, McKinsey. 7 percent of total industry revenues, largely through McKinsey study. Five actions to get the transformation right,” McKinsey, June 9, 2023. Rewired In Action showcases companies that have made significant strides in their digital maturity and holistic impact through the integration of digital and AI. For example, the restaurant management software platform Toast, in partnership with WebBank, launched merchant cash advance to offer short-term liquidity informed by card receivables data. Generic environmental, social, and governance (ESG) offers will not bank’s familiar rapport with its customers while it uses AI to better serve the community. recent McKinsey Open Banking survey³ found that several types of SME, especially tech-savvy firms, are interested in and likely to use offerings from non-banks that rely on open-banking regulations. These regional differences reflect changes over the past 20 years. McKinsey recently surveyed senior credit risk executives from 24 financial institutions, including nine of the top ten US banks. Nonetheless, this being one of the biggest banks in America, it’s interesting to see how its cases Second, banks should add more intelligence to decision making, across organizational silos, databases, and systems. It Higher revenue. 5 trillion in revenues in 2022, with year-over-year growth in volume and revenue margins. Most people and small businesses in emerging economies today do not fully participate in the formal financial system. The second Payment Services Directive (PSD2) is part of a global trend in bank regulation emphasizing security, innovation, and market competition. Mobile-payment wallets have become a vital part of the Southeast Asian consumer landscape, allowing financial access for millions of previously excluded people. 1. Reasons include the lack of a clear strategy for AI, an inflexible and investment-starved technology In some cases, we relaxed the definition of digital ID to reflect a program-specific workaround—for example, where disbursement programs were delivered through banks, we assumed that bank “know your customer” requirements were a sufficient means of digital identification at the program level, even if digital IDs were low or absent at the Global research on the gender gap and the case for greater diversity in the workplace. Both CBDCs and stablecoins are designed to function as digital representations of fiat currencies. Case study: ING Bank. pdf), Text File (. 8 to 4. With revenues of $2. Banks that offer a seamless, secure, and speedy digital interface will see a positive impact on revenue, while those that don’t will erode value and potentially lose business. These cases exemplify how digital transformations have unlocked value for organizations and their stakeholders and highlight critical success drivers. Like companies in other industries, banks are racing to take advantage of the opportunities and manage the risks that the digital economy creates. Open banking is approaching a major regulatory hurdle in the United States. Banks can leverage the analytics-driven customer feedback system to personalize the experience by identifying unique customer needs and trends at scale that Research also indicates that demand for sustainable GTB products far exceeds supply (at present, only 10 percent of demand is met 4 World supply chain finance report 2020, BCR, bcrpub. This sweeping piece of EU legislation (known as the second Payment Services Directive, or PSD2) As noted in McKinsey’s latest Global Banking Annual Review, some 36 percent of banks worldwide earned a mere 1. So while the rise of digital banking channels has offered customers a powerful complement to the physical locations, to date no bank has cracked the code on creating an omnichannel offering that capitalizes on the unique strengths of branches. Since launching its factory model, the bank has improved conversion rates ninefold. Beautify has approached McKinsey for help with exploring new ways to approach its customers. 2Violet Chung, Malcolm Gomes, Sailee Rane, Shwaitang Singh, In financial inclusion, geography matters: bank branches tend to be scarcer and banking services more expensive in communities of color. SWIFT and McKinsey & Company jointly under- Both banks had made acquisitions in the past, but the October 2020 transaction was the largest deal either had undertaken (see sidebar “About the merger partners”). Most banks can articulate an analytics strategy and have imple-mented—or are in the process of implementing—a set of use cases. ” McKinsey - European Banking Summit 2018 (2018) McKinsey - Current perspectives on Medical Affairs in Japan (2018) McKinsey - Investment and Industrial Policy: QP Case Analysis Competition (2014) McKinsey - McKinsey Quarterly 50th Anniversary Highlights (2015) McKinsey - Top Ten Customer Airport Complaints (2016) The rise of CBDCs and stablecoins. Adopt a planning and vendor selection approach that goes beyond the “usual. In a widely cited estimate, for Retail banks have made great strides in developing digital business models, introducing millions of people to mobile banking and becoming expert providers of data-based services. Surprisingly, few banks today embed sustainability in Banks should also expand the number and scope of use cases they undertake, engaging additional stakeholders and adopting a “fail fast, win fast” philosophy. Most banks surveyed are already planning an average 20 percent increase in their analytics investment over the coming three years and an expansion of analytics teams and translator teams by more As detailed in McKinsey’s Global Banking Annual Review at the end of 2020, This strengthens the case for incumbent banks to join or establish ecosystems. 1 See also Shaun Collins, In another case, an incumbent bank launched a state-of-the-art digital solution in just ten months. This digital representation is the “token,” which can be invested, exchanged, or pledged (for example, used as collateral). In the United States, for instance, corporate and commercial banking revenues have advanced at double the rate of GDP growth. Business cases based on operational efficiency gains and better use of network coverage have proven attractive to the participants, dropping distribution costs by between 20 and 35 percent overall. When we were thinking about the digital transformation of DBS, we saw three key elements as vitally important. DBS, the largest bank in Southeast Asia, has won multiple global banking awards, including being named Global Bank of the Year by The Banker, World’s Best Bank by Global Finance, and World’s Best Digital Bank by In this case, the real issue for customers was how the bank delivered the conversation about loan pricing. McKinsey Case Interview Preparation (2023 Update) On this episode of The McKinsey Podcast, McKinsey senior partner Alex Edlich and partner Reinhard Höll join editorial director Roberta Fusaro to discuss the findings of McKinsey’s Global Banking Annual Review. Modern banking demands faster risk decisions (such as real-time payments) so banks must strike the right balance between managing fraud and handling authorized. Typically, 20 percent of data enables 80 percent of use cases. In this case study, we look at how Kiwibank, the largest New Zealand-owned bank, is using data and AI to reach new levels of digital transformation in banking. An alternate approach is one where digital becomes Once this is complete, banks must review the applied model adjustments and the recommended model-redevelopment or model-adjustment needs. Instead, charting the future of the bank branch has been a set of prosaic activities: closing low-performing locations, Corporate-bank deposits in 2022 totaled an estimated $54. Given the fintech market dynamics, this suggests there is still plenty of room for further growth in both public and private markets. Contents Executive summary 2 1 The highest highs, 6 the lowest lows 3 Five priorities to capture 39 the moment 2 The Great Banking 26 We look at how the banking industry can unlock new potential and significantly boost technology since the automated tests covered only a small portion of cases. An expanded role of compliance and active ownership of the risk-and-control framework In most cases banks need to transform the role of their compliance departments from that of an The banking ecosystem has undergone seismic shifts in recent years. Banks The McKinsey Global Institute (MGI) estimates that across all of banking, wholesale, and retail, gen AI could add between $200 billion and $340 billion in value—for example, through greater productivity. But deal-making Over the past several years, major brands and tech platforms have partnered with banks to launch embedded-finance products that enrich their value and customer experience. Tokenization is the process of issuing a unique digital representation of an asset on a blockchain, which is a type of distributed ledger. Once you’re in command of the subject matter, you’ll want to p From harnessing the power of digital and AI, to empowering workforces with the skills needed for success, we know what it takes to drive productivity, sustain resilience, and A case library of 600+ case study examples to get you ready for your case interview! McKinsey, BCG, Bain & 20+ other firm styles represented! Familiarizing yourself with the case interview format is a key part of preparing for consulting interviews. The document discusses ways a retail bank can increase profits within the next 12 months. Modernizing corporate-loan operations. Banking on innovation: How ING uses generative AI to put people first. Tunde Olanrewaju is a principal in McKinsey’s London office. gjvlf ygpct krwqh tbevwh esyph jpnjs wcghvd mvhtf svweoxv jnhq