35% of banks’ market share in North America could be up for grabs by 2020, as traditional branch banking gives way to digital banking and as new competition emerges, a new research published by Accenture revealed.
Accenture’s market analysis estimated that by 2020 a 15 % of traditional banks’ revenues could shift to online-only players, including branchless banks and new technology entrants. Accenture also said that another 20% could shift to retail-driven players with a mass-market focus.
"Digital technology and rapid changes in customer preferences are threatening full-service banks that do business primarily through branches," said Wayne Busch, managing director of Accenture’s North America banking practice. "Given the scale of these disruptions, traditional full-service banks, as a group, could lose significant market share by 2020 to banks that reorient around digital technologies and to new entrants from the retail and technology sectors. Our research shows signs of this already occurring."
Furthermore, the research cites a 50 % increase in mobile banking activity over the past year, with 32% of US consumers now doing mobile banking at least once a month. Meanwhile, online banking was cited as the number one area in which banks should be investing (43%), overshadowing branches (38%).
Online product sales on the rise
According to the survey, sales of mortgages online increased 75%, while sales of the same products via branches significantly declining by 16%.
Online sales of auto loans nearly doubled, while branch-sales dropped nearly 10 %, according to Accenture.
"The Internet has long underperformed as a sales-channel for banking products, leaving branches as the dominant sales engine," added Busch. "As that calculus changes, market share will be increasingly up for grabs — particularly given consumers’ strong tendency to look outside their primary bank for new products."
New branch formats
The survey also pointed to new branch formats aimed at helping banks managing the trends with higher efficiencies and retention. As a solution for banks to maintain sales, while keeping encouraging the digital banking offer, the research proposed a more diverse branch banking model. The proposed solutions were the following:
– ‘Light’ branches. Less than one-third of the network comprised of ‘light’ branches that are oriented to sales. These are highly automated with a small staff and real estate footprint focused on sales and providing access to remote advisory specialists.
– Kiosks. A higher ratio of kiosks – up to half the network – geared to routine account services situated in malls and transport hubs. These are cashless and feature advanced ATMs – with video – allowing customers to connect and transact with remote staff.
– Full-service ‘hubs’. Like conventional branches but fewer in number, these offer full sales and service support with extended hours, including specialized advisers for things like mortgages and trading.
– Flagships. A small number of strategically located flagships to act as centres of sales and service-excellence that promote the bank’s brand and introduce new offerings and self-service tools.