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As challenging as the current operating environment is, we believe the banking sector in 2020 is a land of opportunity.
In fact, banks that can match the agility and innovation potential of other industries could consistently reap pre-tax return on equity (RoE) levels as high as 18 to 25 percent by 2020. That represents a huge jump over the average 11 percent Pre-Tax RoE the largest banks in North America managed at the end of 2012.
To realize success, banks must:
Shift their operating philosophy from a product-oriented organization to a customer-driven organization
Embrace and integrate new technologies, channels and strategies
View the online interactive version of this report at www.accenture.com/banking2020 (optimal experience in Firefox, Chrome, Safari, and Internet Explorer versions 9 and higher).
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Five years after the global financial crisis, many North American banks are struggling to generate sustainable organic growth and return to pre-crisis profit levels. A number of emerging trends. Including digital technology and rapid-fire changes in customer preferences, threaten banks that limit themselves to distributing products and services through physical channels—particularly branches.
Given the scale of these disruptions, our analysis shows that full-service banks could lose about 35 percent of their market share by 2020. Who gains this market share? Digitally oriented disruptors that are more agile and innovative. Some of these will be new entrants to the market, and others will be today’s full-service banks that streamline operations to better meet consumer needs.
However, as challenging as the current operating environment is, we believe the banking sector in 2020 is a land of opportunity.
No matter how banks undergo the journey to sustainable competitive advantage, or what business model banks choose to pursue, they should start to re-rig their ships for success today.
In choosing the right business model, there is no one-size-fits-all solution. The right approach may be a custom solution in which different business models are adopted for different business units, depending on the market requirements within that sector.
Banks can begin the journey to success in 2020 by implementing three building blocks to sustainable competitive advantage:
Optimization and Simplification. Be as efficient and effective as possible in current structure.
Agility. Be able to seize the opportunities in times of change.
Continuous Innovation. Have the ideas, vision and leadership to proactively stay ahead of the market
To capture the emerging opportunities in this era of convergent disruptive forces, traditional full-service banks must shift their operating philosophy from a product-oriented organization to a customer-driven organization able to engage with customers anywhere, anytime on their terms. Most fundamentally, they must embrace and integrate new technologies, channels and strategies.
View the online interactive version of this report at www.accenture.com/banking2020
To position themselves for success in 2020, banks must learn to transform their business models, striking the right balance between what currently works while adapting to change, to leverage the building blocks necessary to thrive, to be more agile and to embrace banking in the digital age.
To learn more, read these related articles:
Building Blocks For Sustainable Competitive Advantage: How can banks go beyond just surviving to thriving in 2020? [PDF, 253 KB]
Agility: How can banks seize opportunities in times of constant change [PDF, 142KB]
Emerging Landscape of Opportunity: What new competitors will join the banking landscape in 2020? [PDF, 677KB]
Traditional Full Service Bank: Why do traditional full-service banks need to break with tradition for success in 2020? [PDF, 153KB]
Charting the Route to Opportunity: Is the evolution of banking business models a one-size-fits-all proposition? [PDF, 379KB]
October 24, 2013
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