Only 5 percent of the baby boomer generation uses direct banks. As of 2021 the youngest boomers are 57, the oldest 75. In the midst of a global pandemic, the branch model for traditional banks is changing. An alternative theory propagates consumers "fondness
for challenging banks, and that traditional banks willing to evolve and renew their model will win this undeclared war." This use limits banks ability to sell more services to the 5% of the baby boomer generation, an area where traditional banks compete and
win. Given the economies of scale enjoyed by executives, the banking group will be challenged to sustain revenue growth as borrowing slows in this late cycle. The focus must shift to increasing its share of current customers wallets by expanding its offerings
beyond traditional banking products.
The first item on their agenda as market leaders will be to increase their share of the wallet among their current customers by improving customer experience (CX) and building a value proposition that goes beyond traditional banking products. As the range
and number of customers increases, they will also target pain points in the customer experience of traditional banks. The five-year-old Mobile First Bank, which operates a digital banking division of Customers Bank in Phoenixville, Arizona, has a Bank-as-a-Service
model that enables BankMobile to acquire customers at a higher volume and lower cost than a traditional bank. The bank is also active in the student loan market through a White Label partnership with T-Mobile, where it uses the latter brand and plans several
other white label partnerships. Community banks have rich relationships with their local user groups and trends in interaction with branches. They also help to change gender distortions in banking and financial services by bringing about equality of pay and
status between banks and female executives.
Banks that manage retail portfolios and investor behavior studies have found that the biggest drop in returns is not due to management fees or lack of diversification (clients will not remain invested in the medium term) but rather because they pay less
attention to discretionary portfolio management that benefits both parties. In order to change this dynamic, it is necessary to regain the customer interest and confidence that a bionic bank must be a nineteenth-century bank when it comes to concluding the
customer relationship and showing that it practices and communicates that its interests coincide with those of its customers.
In some ways, banks have gained a significant advantage over tech competitors by becoming major players in the mortgage business. But competition from technology companies like Google is fast and furious, and banks pretend to have knowledge about customer
behavior that the disruptors have not gathered. Over time, huge technology companies will be able to blend in between banks and their customers, capture key customer relationships, and pose an existential threat.
On the positive side, a number of banks are working with fintechs and digital companies to use big data analytics to advance risk assessments and drive revenue growth. Global banks seem to be shifting their distribution channels from brick-and-mortar to
non-physical channels that will be the main interaction channel between banks and consumers in the future. As a result, banks will find it increasingly difficult to control this part of the value chain with traditional business models when customer expectations
for financial services rise.
In order to keep pace with changing customer requirements, traditional banks are investing heavily in the central and back office, which is underpinned by cooperation with fintechs. Banks have yet to invest in the type of apps customers want to use, and
the complex manual processing that exists in their middle and back office has led to disjointed levels of customer service which has been disappointing even in this collaboration.
While fintechs have experienced a gold rush of investment, from $11.1 billion in 2018 to $51 billion in 2017, bank executives are increasingly facing pressure from shareholders alarmed by the slow pace of change. Challengers such as First Bank (Chime in
the US), Monzo in the UK and N26 in Germany have been around for several years, but major global and regional banks are struggling to cope with the competition. According to the latest World FinTech Report by IT service provider Capgemini, traditional banking
is at its worst, preventing banks from working fruitfully with fintech.
The report found that despite high investment in digital technologies, banks' attempts to change the way they package and deliver their products to customers have proved inadequate. In our discussions with senior managers of banks, we discovered several
blind spots and found that incumbents are most affected by disruption. There is much to lose if the banks get it wrong and customer dissatisfaction is high.
On the other hand, neo-digital banks find it difficult to obtain low-cost financing and maintain long-term relationships with their customers through more than one point of contact. Many of them will shift to credit services and try to help banks do more
in the backend, or they will try to work with them to consolidate their technology. Traditional banking sites do better than online banking, but they are dead banks. Online-only banks are nowhere near able to overtake traditional banks, but they are on the
rise. Traditional banks are anticipating this shift and expanding their platforms with mobile banking options. If you are considering switching to an online bank account, take a look at our test of the most popular online banks. Internet Cocoa Bank, a financial
services app from Toss, recently highlighted its ability to offer its customers bespoke services by leveraging big data. Like Cocoa, the company teamed up with a local card issuer earlier this month to offer credit card services for the first time. While traditional
banking skills based on a range of customer-centric soft skills are in demand, the advent of digital banking requires specialised digital skills to facilitate mobile apps and digital banking.
In summary, older consumers signifie less retail lending. Banks will struggle on growth and interest rates and will have to face pressure on their profits. Rethinking the banking strategy with a digital-first and transformation strategy seems to be the only
way out and the only chance of survival for traditional banks.
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