Where will customers bank tomorrow?
“The branch is dead”?
In a survey on consumer finance carried out by the Federal Reserve Bank in 1995, entitled “Who uses electronic banking?” the authors asked: “Will internet banking ‘commoditize’ financial services to the point that any existing locational rents are made irrelevant?”
This statement was made more than 20 years ago and still seems visionary today, as banks are still confronted with the question: Where will customers bank tomorrow and how can I use this to drive my profits?
The world and customers are changing—and so should banks
Transforming bank distribution will directly drive profits
The traditional bank model and its profits are under pressure in an environment where the bank is no longer the only actor providing banking services. Traditional banks are facing new, untraditional competitors who really know what they are doing. They are slowly stepping into the banks’ territory and grabbing chunks of market share by capitalizing on their understanding of consumer expectations to respond quickly and accurately to customers’ needs and banking behaviors. As commercial companies, such as telephone operators, internet giants such as the GAFA,2 and lean new startups enter banking services, banks are confronted with a new type of competition and disappearing revenue streams. Just looking at some numbers, a survey by Fortune magazine shows roughly one in three banking and insurance customers globally would consider switching their accounts to Google, Amazon, or Facebook.
Inside magazine issue 15, June 2017
Inside is Deloitte’s quarterly magazine offering an exclusive insight into best practices, trends and opportunities faced by our clients across all industries.
Inside focuses on the main hot topics relevant for the market (Asset management, Banking, Insurance, Public sector, Healthcare, Private equity, Real estate, TMT, Manufacturing and consumer business, Transport and logistics).