Two watershed events−Varo’s obtaining FDIC approval for insurance coverage and LendingClub’s proposal to Radius Bank−suggest that the economics of banking aren’t that bad after all! The financial arbitrage of lending at a risk premium and borrowing at a risk free rate works. Payment services paid for by merchants works in favor of consumers.

To outperform, however, a bank must have critical success factors in place:

• At the top of the house, customer-centric and data-driven leadership
• A value proposition consumers believe in, that is, one that places them at the center of all decision-making, economic and otherwise
• New business and operating models that break down silos, redefine product development along design thinking, and leverage data analytics
• Light, modern tech infrastructure

For further commentary, please see my reports, From Challenged to Challenger: Becoming a 21st Century Bank and Pacesetters in Customer Engagement: Top Trends and Best Practice Players .

The 21st Century Bank: