Introduction to Retail Banking Business Models

On completion of the Business Models module, candidates will be able to:

• Understand the relationship between a retail bank's strategy and business model and how it influences the bank's operating model, which is discussed in the Customer Management Module;
• Understand the key features, advantages, and disadvantages of the business models that most banks use;
• Identify the drivers of change in retail banking that are making banks examine their current business model to improve their relevance to customers and their survival and growth in a competitive environment;
• Understand the importance of customers' trust in financial services and how some business models can erode trust and how some can rebuild trust between the bank and its customers;
• Understand the challenges of banks who believe that they are customer-centric but operate a different model;
• Explain the case for a bank adopting a customer-centric business model.

This module will develop your understanding of the different business models that retail banks can use to create, deliver, and capture value for their stakeholders, who include shareholders and investors, customers, employees, and the community.

During the past 20 years, banks have become 'financial supermarkets', where the customer can buy all the products and services they need. This has contributed to them adopting a product-centric approach.

However, as we discuss, new players such as Revolut have emerged and are threatening to unbundle the bank's most lucrative revenue streams by providing very good niche products that they can then expand into a wider retail banking offering.