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Three new business models will emerge to change the Banking industry landscape in 2020: the niche digital provider, the digital, full-service bank and the big box bank.
Banking business models. What they are today is not what they will be tomorrow. Three new models—the niche digital provider, the digital, full-service bank and the big box bank—will have the biggest effect on traditional full-service banks in 2020.
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Read the Banking 2020 Report
Survey today’s banking landscape. Traditional full-service banks dominate market share. Monoline players and small/community banks focus on specialized products or limited geographic areas. All three models will survive. However, change will be required to win against increasing competition.
Today’s traditional full-service banks could collectively lose about 35 percent market share by 2020 to more agile and innovative players. But the reality is not all gloom and doom.
Banks have exciting opportunities to protect and build their business. They can either evolve existing banking business models to be competitive or explore three new models for future success.
The first new model is the niche digital provider, which is highly agile and highly specialized. These banks have a flexible infrastructure and pioneer banking social media and mobility banking. They will likely result from new entrants or innovative joint ventures between traditional players and technology providers.
Whether rooted in existing institutions or new entrants, digital, full-service banks will also emerge as truly digital businesses. They will offer a range of products and next-generation digital customer experiences without heavy reliance on physical distribution channels.
Finally, big box banks join the 2020 banking landscape offering commodity products to mass-market customers. Their customer appeal lies in broad product offerings and value pricing.
Each banking business model has the potential to be highly disruptive. The real question for traditional full-service banks is this. Should they alter their path, or choose an entirely new one? Either way, opportunity abounds.
November 18, 2013
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