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In a world where digital technologies are dissolving boundaries between industry sectors, banks face the risk that competitors from other industries will consign them to a limited role as a utility. Accenture’s research and experience suggest that simply “being more digital”—creating upgraded, digital or mobile-friendly versions of existing products and services—will not be enough to fend off these challengers.
However, despite industry disruptions and looming changes in the payments space, banks possess inherent competitive advantages in the digital world, including a large and relatively “sticky” customer base, vast amounts of customer and transactional data, and valuable know-how in the field of payments, security, compliance and financing.
In this new digital world, winning and retaining customers hinges on creating value for them that enhances the convenience and quality of their everyday lives beyond mere transactions. By adopting an Everyday Bank strategic vision and then turning that vision into a reality, banks can develop a new position for themselves—as trusted partners before, during and after the financial transactions that define customers’ commercial lives.
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Digital technologies are dissolving the boundaries between industry sectors. Banking is no exception. In fact, in the not-too-distant future, non-banks may be poised to become as integral to the banking value chain as the incumbents. Accenture estimates that competition from digital players could erode as much as one-third of traditional retail bank revenues by 2020.
For banks, as industry profitability stagnates and customer loyalty becomes more tenuous, the risk is that competitors from other industries will consign them to a limited role as a utility. Accenture’s research and experience suggest that simply “being more digital”—creating upgraded, digital or mobile-friendly versions of existing products and services—will not be enough to fend off these challengers.
In order to avoid disintermediation and to generate value in this new digital world, banks will need to move beyond their traditional role as enablers of financial transactions and providers of financial products to play a deeper role in the digital and commercial lives of their customers. We refer to this as the “Everyday Bank” strategy.
Despite the challenges of industry disruptions and looming changes in the payments space, banks possess inherent competitive advantages in the digital world that are difficult to replicate. They have:
To take advantage of an Everyday Bank strategic vision, banks need to become:
Access facilitators, helping customers to discover products and services relevant to them, as well as to buy them and maintain them.
Value aggregators, delivering merchant-funded rewards and discounts on everyday purchases through loyalty reward schemes based on volume and scale.
Advice providers, using the insights they have into customers’ buying patterns to help them manage their money and deal with big financial milestones such as major purchases, healthcare or retirement.
To turn the Everyday Bank vision into a reality, banks must consider:
Moving beyond their traditional boundaries to develop an ecosystem of partners.
Mastering analytics to anticipate customers’ needs and deliver timely offers.
Embracing omnichannel interactions for seamless integration of the customer experience across in-branch-assisted and digital interactions.
Creating a digital core with an IT infrastructure that is highly flexible and scalable, enables single customer views and dynamic product bundling, and allows for the management of third-party products and services in real-time.
The digital revolution is radically re-shaping just about every aspect of the banking industry, from customer service expectations to consumers’ understanding of what a bank is. It is also enabling companies to venture into other industries at amazing speeds.
June 12, 2014
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