RESEARCH REPORT

In brief

In brief

  • New Accenture study notes that bank newcomers have grabbed one-third of revenue growth in Europe.
  • Individual banking market structures are likely to land in four scenarios over the next five years.
  • Such evolution calls for banks to make medium-term “North Star” business model choices that guide them to win in the digital economy.
  • We offer five key actions banks should take now to compete and stay relevant.


Banking has changed how much?

Findings from an Accenture quantitative study on the banking industry structure shows that 17 percent of players in 2017 joined the market since 2005. They now command one-third of revenue growth in Europe. Newcomers include challenger banks, non-bank payment institutions, credit intermediation platforms and bigtech that are having impact across numerous countries. In China, for example, Alipay and WeChat have more than 1.3 billion mobile payment users and account for 94 percent of that market.1

In the UK, 63% of new players have taken some 14% of revenue.

What was once a very stable industry has become a fragmented, highly competitive and open landscape. For incumbents, simply being a digitally better version of themselves is unlikely to be a winning strategy.

Potential evolution of the banking market structure over the next five years

Market contexts create a wide range of options for banks in choosing their to-be models. From careful consideration of the two principal dimensions for measuring market disruption—the level of market fragmentation and the level of revenue migration—we identified four likely scenarios of how banking markets will evolve. Not all business models are equally viable in each market.

Four market categories to consider for winning in the digital economy

Ecosystem master

Open market

Status quo

Value shift

Picking the right North Star model is an urgent and market-specific decision

Our Winning in the Digital Economy report introduced four archetypal business model choices for retail and commercial banks that would address changing customer needs, exploit new technology and guide banks’ strategic decision making in the medium term. These were: Digital Relationship Manager, Digital Category Killer, Open Platform Player and Utility Provider.

Four digital-ready banking business model choices

Digital Category Killer

Focused problem solver. Branded. Tech-driven.

Digital Relationship Manager

Trusted advisor. Customer-centric. Ecosystem curator.

Utility Provider

Scale/low cost. Ubiquity. Non-threatening.

Open Platform Player

Liquidity. User-generated content. Social.

Five key actions for banks to compete and stay relevant

  1. Understand the structural changes in their market to determine which business models will work best there, where competition is likely to come from and how best to ignite the rapid evolution required to grow business.
  2. Stop doing things that no longer align with the chosen North Star business mode and are simply distractions that sap scarce resources.
  3. Be crystal clear about where incremental revenue growth will come from through the business-model choice.
  4. Create a technology and operating model aligned to the destination business model.
  5. Understand what the bank is as an institution and shape the new business model to make the most of cultural strengths.

We can help incumbent banks keep pace with market changes, choose their winning North Star business model and rotate to it quickly for growth. Download our report to learn more about the research findings and five actions.

1 China Economic Review, “UnionPay Struggling in Mobile Payments Era,” August 1, 2017

Alan McIntyre

Senior Managing Director – Accenture Banking


Julian Skan

Senior Managing Director – Accenture Strategy


Francesca Caminiti

Principal Director – Accenture Research

Contributors

Elena Vizzardi

Contributor


Mauro Centonze

Contributor


Dariusz Orynek

Contributor

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