Commercial banking is at a pivotal crossroads. The sector, long defined by product-centric models and legacy infrastructure, now faces a new era—one where customer-centricity, digital agility, and hyper-relevant experiences are not just differentiators, but imperatives for survival and growth. As digital-first challengers and evolving customer expectations reshape the landscape, commercial banks must move boldly beyond incremental change to reimagine their operating models, technology foundations, and value propositions.
Historically, commercial banks have lagged behind their retail counterparts in digital transformation, hampered by complex customer needs, bespoke products, and entrenched silos. However, the urgency to transform has never been greater. According to recent benchmark studies, 58% of commercial banking executives believe their organizations are not investing enough in digital innovation to keep pace with digital-first challengers. Meanwhile, challenger and specialist banks now account for the majority of new lending to small businesses in markets like the UK, setting new standards for customer experience and operational agility.
Yet, many incumbents remain confident in their customer experience capabilities—sometimes overly so. While 82% of executives say their organizations track customer experience metrics, 71% admit that evolving customer expectations are exposing weaknesses in their bank’s offerings. The reality: it is the challengers who are raising the bar, and incumbents must act decisively to avoid being left behind.
The journey from product-centric to customer-centric banking is fraught with obstacles:
Digital-native and specialist banks are leveraging modern technology stacks, data-driven insights, and agile ways of working to deliver frictionless, hyper-personalized experiences—especially for SMEs and underserved segments. Their ability to rapidly launch new products, integrate with third-party platforms, and respond to market shifts is redefining what customers expect from their banking partners. As these challengers expand their reach, incumbents risk losing relevance unless they fundamentally rethink how they serve, engage, and retain customers.
To move beyond product-centricity, commercial banks must embrace a holistic transformation across six foundational areas:
Modern, cloud-based, coreless architectures are essential for breaking down product and channel silos. By decoupling data and business logic from legacy systems, banks can more easily add or replace components, integrate with partners, and accelerate innovation. This architectural flexibility is the foundation for delivering seamless, consistent experiences across the customer lifecycle.
Customer centricity is impossible without a unified, high-quality data foundation. Coreless architectures enable banks to aggregate and activate data from across the enterprise and third parties, powering advanced analytics and AI-driven insights. With the right data, banks can anticipate customer needs, personalize interactions, and automate decision-making—unlocking new value for both customers and the business.
Digital channels must evolve from transactional self-service portals to intelligent, proactive engagement platforms. Embedding digital assistants, AI-powered recommendations, and seamless handoffs to relationship managers ensures that customers receive relevant support and advice at every touchpoint. Assisted channels, powered by digital workbenches and knowledge management tools, enable relationship managers to focus on high-value activities and deliver tailored solutions.
Data and analytics allow banks to move beyond static segmentation, enabling dynamic, needs-based coverage models. Relationship managers can be incentivized to focus on customer outcomes—such as business growth, resilience, or sustainability—rather than product sales. This shift fosters deeper, more strategic partnerships with clients.
With a modern technology and data foundation, banks can rapidly design, test, and launch new propositions that address specific customer needs. This includes integrating banking and non-banking services, leveraging ecosystem partnerships, and continuously iterating based on customer feedback and market signals.
Organizational agility requires funding models that support rapid reprioritization and outcome-based investment. Leading banks are adopting quarterly, outcome-driven funding cycles, enabling them to accelerate high-impact initiatives and pivot quickly as market conditions evolve. Agile, cross-functional teams—spanning technology, data, operations, and customer experience—are essential for breaking down silos and driving sustained transformation.
Leading banks are already demonstrating what’s possible. For example, a major commercial bank leveraged a cloud-based, coreless architecture and advanced analytics to reduce SME onboarding times from weeks to under an hour, while simultaneously improving risk controls and customer satisfaction. Another institution used AI-powered insights to proactively identify clients at risk of churn, enabling relationship managers to intervene with tailored solutions and retain high-value relationships.
No bank can achieve this transformation alone. Strategic partnerships—with technology providers, fintechs, and ecosystem players—are critical for accessing new capabilities, accelerating innovation, and sharing risk. Outcome-based and co-investment models are increasingly common, aligning incentives and ensuring that both banks and partners are focused on delivering measurable business value.
Incremental change is no longer sufficient. The pace of disruption, the rise of digital-first competitors, and the ever-increasing expectations of business customers demand a bold, holistic approach to transformation. Banks that move decisively to become customer-centric—by reimagining their operating models, embracing coreless architecture, activating data and AI, and fostering agile, outcome-driven cultures—will not only defend their market positions but unlock new sources of growth and relevance in the digital era.
Now is the time for commercial banks to make the leap from selling products to solving problems—delivering the hyper-relevant, personalized experiences that today’s customers demand and tomorrow’s leaders will expect.