The financial services industry stands at a crossroads unlike any before. We live in a world defined by VUCA (Volatility, Uncertainty, Complexity, and Ambiguity), a term originally coined by the military but now perfectly capturing the turbulent economic, competitive, and regulatory landscapes banks must navigate.

Many banks today hold a meaningful share in legacy markets that are now low or no growth, and a meaningless share in nearby growth markets. That’s a fast track to irrelevance.

If you really want to understand your customers — what they’re trying to get done, the pains they’re trying to avoid, and the gains they’re chasing — you need a different kind of dialogue.

For decades, if you could master balance sheet management, you could run a successful bank. That’s no longer true. Balance sheet management is of course still necessary, but it’s nowhere near sufficient. Strong credit quality and ALCO discipline will keep you from failing, but they won’t guarantee success, or even survival.

Cost-cutting might preserve your efficiency ratio for a quarter or two, but innovation and differentiation are what build sustainable value over decades.