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The 3 R’s of Modern Retail Banking

The 3 R’s of Modern Retail Banking

Banking innovation experts sometimes get carried away with the aesthetics of digital bling. A Modern Retail Banker (MRB), however, has to remain sober and vigilant when it comes to ApplePay, M-Pesa and BitCoin. Making sure all the I’s are dotted and T’s crossed is a key part of an MRB role. There are 3 R’s paramount to every MRB’s job role:


AML, KYC, CTF and hundreds of other regulations will always have to be adhered to by banks. We hear bankers complain about over-regulation. And yes, indeed, there is regulatory arbitrage and a regulatory gap between banks versus FinTech companies (FinTech companies sometimes even operate in a regulatory-vacuum) and yes, this is unfair. But in the long run, being the best supervised and best-regulated sector will be an overall benefit to banks. Being unconditionally compliant with no exceptions is absolutely imperative for all Modern Retail Bankers.


No matter how much transition and no matter how much innovation, banks will always be the nuclear plants of the financial sector because they have humongous balance sheets. This is the case because they operate with inherently large leverage, by transforming customer deposits (from the liability side of their balance-sheets) into customer loans (to the asset side of their balance-sheets) and therefore the vast majority of their balance sheet is made up of value that originates from and belongs to third parties. The size and the leverage of the balance sheet are factors which have always made and will always make banks highly risky environments, where caution, care and conservative approach will be factors of survival and security. The fine balance between remaining risk-aversive, yet becoming increasingly innovative is a tough one. Experts have come up with the concept of ‘Banking Innovation Paradox’ which puts innovation and risk-management into a clash of opposite positions. Overcoming this antagonism clearly requires advanced banking skills.


Innovation is important and Beta Products, as well as Pilot Projects are necessary when delivering new solutions. Reputation however will always remain a key element of retail banking. Software companies are able to enroll unstable, uncertain Beta solutions unlike the major banks. The Modern Retail Banker has to have a sense of ‘customer readiness’ and a conservative and cautious approach to enrolling new solutions.


This is a repost from The Retail Banking Academy.

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