Research from PwC has revealed that over half (55%) of senior retail banking executives view non-traditional financial services providers as a threat to traditional banks. The report, Retail Banking 2020: Evolution or Revolution, based on a survey of 560 financial services executives from leading financial institutions in 17 countries, also found that over half (54%) believe that large banks will be the winners in 2020. The remainder (46%) see smaller banks capturing share through increasing differentiation. Executives are also divided as to the threat posed by non-traditional new players: while 55% believe they pose a threat to traditional banks, 31% believe they present innovative partnership opportunities.
Executives differ in their views by region. For example, many more US executives view non-traditional new market entrants as a threat (71%), than executives in Asia (42%), where more view them as an opportunity (44%) for partnering and prospering together.
Stelios Constantinou, Banking industry leader at PwC Cyprus said:
“Powerful forces are transforming the retail banking industry. Growth remains elusive, costs are proving hard to contain and returns remain stubbornly low. Regulation is impacting business models and economics. Technology is rapidly moving from being an expensive obstacle to a critical part of both customer experience and effective operations. Non-traditional players are challenging the established order, leading by putting their customers at the heart of their decisions. Customers are demanding higher levels of service when value and trust in the sector is at an all-time low.”
Over two thirds (70%) believe it is important to consider how global trends (such as economic growth, regulation, and social, demographic and technological changes) will impact the banking industry in 2020.
90% of executives agreed that six key priorities identified by PwC for success in 2020 are important:
• Putting customers first
• Getting to grips with the move from traditional branch-based to digital banking
• Simplifying business and operating models
• Ensuring they can harness the power of big data
• Innovation
• Proactively managing risk, regulation and capital.
However, only a fifth (20%) feel well-prepared to address these priorities.
Asked to name the top three challenges facing the banking industry, 40% of European executives cited regulatory compliance followed by attracting new customers (33%). The impact of the loss of trust in the industry is also felt keenly with almost a third (31%) of executives citing this as a top challenge. Over half (56%) of European executives said that their top investment priority is enhancing customer service, with a third (36%) citing investment in regulatory compliance and 27% implementing new technology.
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Download a copy of Retail Banking 2020: Evolution or revolution from www.pwc.com/banking
