On October 28th, 2014, Lloyds Banking Group confirmed that it will cut 9,000 jobs and close 150 branches over the next three years. Barclays also announced major cuts to frontline staff in 2013. Both of these banks state that the reasons for these cuts are to rethink and refocus their banks in order to better run their businesses in a digital era. The concern in the industry is that this could just be the start of what could be a very major disruption in the banking sector. Other industries have already been transformed by digital disruption but the finance industry, for the most part, has evolved slowly and has seen only minor disruption. Traditional players in banking are seeing pressure from a new wave of competitors entering the market with the potential to erode revenues and steal market share. The challenge for banks is to adapt their businesses before they see one of these new players usurp their places in the market.
Barclays may be the most advanced in making a digital transformation. Other banks, like RBS are seeking to enhance their digital services through massive investments over the coming years. The difficulty for these larger banking institutions is that they are encumbered by a variety of factors when addressing innovation. One solution some are looking to is to oursource their innovation by partnering with technology startups.
