The FINANCIAL — Thirty-five percent 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, according to new research published by Accenture.
Accenture’s market-analysis indicates that by 2020 an estimated 15 percent of traditional banks’ revenues could shift to online-only players, including branchless banks and new technology entrants. Another 20 percent could shift to retail-driven players with a mass-market focus — under partnerships between big-box retailers and banks, and potentially independent ventures by retailers.
Based on customer survey-data, the research cites a 50 percent increase in mobile banking activity over the past year; double- and triple-digit growth in online sales of traditional banking products (amidst declines in branch sales); and a strong trend of customers looking outside their primary banks for new products. It also points to new branch formats to help banks manage the trends with higher efficiencies and retention.
Online sales of key banking products showed double-digit growth year-over-year, while sales of the same products via branches declined, according to the survey. Sales of mortgages via the Internet increased 75 percent, while sales at branches fell 16 percent. Online sales of auto loans nearly doubled, while branch-sales dropped nearly 10 percent. Online sales also increased in checking, savings, personal and home equity loans and money market funds.
While US consumers tend to stay with their primary banks (only 9 percent had switched within a year), they are heavily inclined to shop around for new products. One-third (34 percent) of traditional retail banking products sold last year were from institutions other than customers’ primary banks, according to the survey.
Recent promotions of services like mobile check-deposit by major US banks are driving rapid mass market adoption. Use of mobile banking has increased 50 percent since last year; and nearly one-third of US consumers (32 percent) now do mobile banking at least once a month, according to the survey.
Over the past year, mobile banking nearly displaced ATMs as the most important area customers believe their banks should be investing in and developing (mobile banking 20 percent vs. ATMs 21 percent). Meanwhile, online banking was cited as the number one area in which banks should be investing (cited by 43 percent), overshadowing branches (38 percent).
The top 25 US banks spend more than $50 billion per year to maintain branch networks, where approximately 60 percent of all products are sold, according to the research.
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