Julius Caesar, the Nile River and Coase’s Nobel Prize: What happened in the last decade and what will happen in the next in the financial industry


A talk given by Julián Colombo

Despite the divergent theories and strategies that permeate the banking scene, with institutions defending different approaches, something has become unanimous in recent years: digital transformation. We will ask any banker about their activities in the last decade, the answer will be almost universal: search for digital transformation.

But what does digital transformation really mean? Conceitually, we can summarize in three aspects:

  • Increase in the Functionality of Non-Human Channels: In search of more efficient distribution due to the need for mobile devices to assume tasks previously performed by executives. The cell phone will be turned on at some point in the process.
  • Addressing a Value Proposition and Communication similar to a Fintech: A current cultural revolution, transforming previously serious banks into “cool” and relaxed entities. The language, the style and the approach have now been established in the universe of fintechs.
  • Changes in the Organization and Methodologies of Ages: Agility turns to the order word. In the past, developing software required years of planning, while the agile philosophy advocated learning through quick, iterative mistakes.

In this cenário, the banks have absolute success for us. In 2008, one of every operation (12%) could be done on a cell phone. Currently, that number has risen to 83%, while many banks operate exclusively on mobile platforms. Also, how to use mobile phones is possible to access information that banking agencies have not known before, such as the value of your house for a mortgage, things that we have not imagined for more than 10 years.

We do not see just a replacement for two more expensive channels, but also the creation of new things with the use of technology, a communication and value propositions more similar to those of a fintech. Various banks do offer a digital account without any requirements, just with the help of the cell phone screen. The banks have not succeeded, it is proposed and made incredibly good, but the reality is that the banks do not live for two months, live for two ends, or say, financial results.

It is in this aspect that nothing happens before. Traditional banks earn on average $12 dollars per person per month, while digital banks lose $1.50 dollars per person per month. Only 14,2776 digital banks that exist are unable to profit, indicating a significant challenge to the business model.

This search incessantly by a common direction, many times, neglects the final results of the organizations. There are cases of success, such as banks developing their own software or acquiring specific solutions. On the other hand, some traditional banks face a technological entropy by trying to adapt to generic software, those that are built for any and all industries.

The digital transformation was, without doubt, a framework in recent years, but the search for solid financial results continues to be a complex challenge in the banking sector. Therefore, for the future of the financial market, it is still necessary to consider these challenges, because regardless of the scenario that is developed for the future, searching for sophistication alone will not serve to innovate and prosper.

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