In May, McKinsey released a report of their latest findings and advice on potential improvements in banking and payments.
The report points out that the threat of disintermediation looming over banks can be neutralized through the implementation of judicious partnerships and white-labeling of technological products that update aging infrastructure.
“Third-party platforms are making it possible for banks, non-bank financial institutions, payments processors and other organizations to customize cross-border services in ways that go beyond the options offered by traditional correspondent banking arrangements. Ripple Labs, having developed a real-time, cross-border open payment protocol based on recent cryptocurrency technologies, is an example of these new types of third-party platforms. Such innovators allow financial institutions to streamline and improve the service levels and costs of critical steps in the correspondent banking infrastructure, such as message routing and settlement. The speed at which new entrants are evolving, as shown by Ripple’s recent partnership announcement with Earthport, increases the potential for a significant disruption within the industry.”
McKinsey goes on to outline the five criteria for successful partnerships in this sphere:
- Clear partnership strategy. Both partners understand who the customer is and what they expect in terms of service upgrades.
- Strategic fit of partners. Any relationship between partners must be predicated on trust and a “complementary footprint.”
- Harmonized customer experience.
- Integration between platforms and seamless processes on the customer side, resulting from shared governance and reporting on the business side.
- Aligned incentives. Financial or operational incentives can help to align goals and visions between organizations.
Download the full report.