The digital revolution is gaining pace across business and industry and particularly in financial services. The Covid-19 pandemic has accelerated the adoption of digital services by consumers and is being turbo-charged by advances in technology and by the expansion of Open Banking and Open Finance. The landscape is changing faster than ever before. In this rapidly changing environment, established banks must evolve or face relegation to a niche in the financial ecology, or worse, extinction. Described in this way, the outlook may sound bleak. But it need not be.
In our latest UK Banking report, we examine the steps that established players can take, not just to defend their territory, but to use digitisation as an opportunity to unlock new sources of revenue. We believe established banks have a number of powerful advantages – their branch networks that embed them in local communities, their brand recognition, and their history of personal service. In the next phase of digitisation, these assets will give established banks and building societies a vital edge. The key to success will be in marrying these with a digital vision.
In our report, we outline four pillars that can form the foundation of future success and growth.
The first is to embrace digitisation – not just in current accounts, but across the full product offering. This will both act as a defence against the pure digital players who are advancing into new product areas such as mortgages, and an opportunity to grow revenues.
The second is to maximise personalisation. Advances in technology, such as artificial intelligence and in behavioural science will allow financial services to ‘hyperpersonalise’ products and services to anticipate consumers’ needs and turn them into revenue streams.
Thirdly, the branch network has a vital role to play. Branches that work in harmony with digital services will be an advantage for established banks against pure digital rivals. Despite the growth in online, face-to-face service is a huge value-add in the delivery of major products from mortgages to investment.
Finally, there is Open Banking and Open Finance. For those established banks that embrace digitisation, personalisation and integrate these with their branch networks, Open Banking is a chance to provide the focal point for their customers’ financial needs.
To find out more about the trends in digital banking and how they can work to deliver revenue and growth, download our report here.