For banks, this creates an existential threat. They need to become agile and transparent so that they can quickly adapt. Incumbents need to be able to conceive of and launch new products in a day; know their liquidity position in real time; reconfigure the back end to take in regulatory changes within hours or at worst days; and they need to put the customer front and centre. Many banks believe the answer lies in technology. But technology is just one piece of the puzzle.

Incumbents still see change as bad, or as a source of added risk. This is old, legacy thinking. The truth is that only those that can adapt and respond to market dynamics will remain profitable and find new growth opportunities. Such players will be treating change as an asset, rather than a liability. But this is just the start.

Speed of response is also paramount. Today, five-year transformation plans are useless, instead, banks need to be planning only a few months ahead – or 18 months maximum.

For the incumbents still operating on legacy systems, this means ditching multi-year transformation programmes designed to bring them into the digital age. In their place, banks must work out how to deliver incremental change. In practice, this means adopting a series of progressive renovation projects, where the bank is digitised gradually, or by launching a new parallel bank. Think ABN Amro with New10, TNEX, and CBA's Unloan.

Embracing change has to be embedded in every banks’ culture – even banks that are born digital. By integrating change into their culture and embracing innovation, a bank can effectively and promptly respond to emerging challenges, be it new regulations, technological advancements, competitors, or unexpected global crises.

These elements alone, however, are insufficient. There is another vital quality that banks must possess to ensure long-term success: collaboration.

Banks have historically taken on the leading role, handling all aspects, from mortgages to payments, and managing their own technology. Today, in contrast, it is the customer that takes centre stage, and the supporting ensemble of actors is expanding constantly in both size and significance. In this new role, banks must collaborate closely with partners to deliver customer demands. This collaboration may lead to rivals becoming partners, outsourcing core processes, or generating new revenue streams.

Putting the customer at the centre of everything means that it is the customer, not the bank, that has to be at the heart of its business model. To give the customers what they want and/or need when they want it the business model has to be agile.

When the customer wants or circumstances demand change, the bank must be able to deliver it swiftly and at low-cost. The business model must have agility running through it. This means having processes that are nimble and production lines that can change fast.

Banks have traditionally looked at risk in terms of liquidity, operational and regulatory first, then costs, and finally revenues. But the market has changed, and today the risk is also an inability to adapt at speed.

This was very much the approach of Recognise Bank. It identified SMEs as an orphan sector, neglected by the market. Recognise saw it could bring costs down by using the right SaaS partners to automate processes. This meant it could afford to invest in relationship managers to bring continuity to contact and advice, making it profitable to provide this value-added service to his niche market.

Crucial to this model are fintech partners, forming the bank's ecosystem. By collaborating with best-of-breed suppliers, the bank can delegate innovation and development. The key concept is the ability to swiftly replace existing solutions with better ones as they emerge.

It’s up to banks to compose their own model and then their own ecosystem to deliver that model’s goals. This is a composable approach in which the ecosystem is forever evolving but that allows the bank to swiftly launch its primary service and build it out over time.

Ultimately, customers benefit from improved solutions. This collaborative business model drives continuous improvement, as ecosystem members compete to deliver the best service, process, or product, with the customer as the focal point.

The third piece of the agility puzzle is technology.

The final reason for banks falling foul of rapid change is their cumbersome legacy systems. Built up over decades, the banks own the systems outright and they sit on the balance sheet as a fixed cost. These systems are expensive to run, difficult and slow to adapt and don’t scale easily. The thought of ripping them out and starting again is so loaded with risk that the majority of banks have yet to start.

As they stand, the majority of the incumbents pose little threat to neo challengers, champions of all three attributes of agility. The best, most nimble neo banks have cloud-native digital cores delivered as pure SaaS using a single code base. This core focuses only on the essential banking functions, and is enhanced by plug-and-play, add-on software packages delivered via APIs that give the functionality the bank requires to fulfil its business goals.

Banks using this technology can scale software capacity as needed, avoiding idle costs. Single code base simplifies upgrades, while cloud-native architecture enables smooth continuous delivery. Automated processes minimise errors and streamline upgrades. Open nature allows secure integration with third-party providers, enhancing the bank's ecosystem.

This model enables banks to focus on their core strengths, delivering superior products and services to customers at competitive prices. The composable nature of the ecosystem means players can be swapped in or out as required to meet changing market dynamics. Combined with the bank’s culture of embracing change, the technology makes the bank truly agile.

The cat is out of the bag. Customers expect and demand value-added services wherever they shop – including from their banks. Technology will continue to enable further change so that ultimately banking will become the invisible coordinator of multiple services, not all of which will be provided by the bank. Ultimately, this means banks will become embedded into our everyday lives to the extent that customers will be unaware of the role the bank is playing in their lives.