Up to a third of banks' market share in America could be up for grabs by 2020, with new digital-only players and retailer-run enterprises taking on the old guard, according to research from Accenture.
Americans are changing the way that they bank, turning their backs on branches in favour of online and mobile channels, Accenture's survey of 2001 suggests.
This, combined with a willingness to shop around for banking products means that online-only players and new technology entrants could snap up as much as 15% of revenues over the next few years. Big-box retailers, with their name-recognition, money and existing customer relationships, could prove an even greater threat, gaining 20% of the market, either by working with banks or striking out on their own.
According to the survey, online sales of key banking products have shown double-digit growth year-over-year, while sales of the same products via branches have declined. Sales of mortgages via the Internet increased 75%, while sales at branches fell 16%. Web sales of checking, savings, personal and home equity loans and money market funds all also increased.
This switch is partly down to a willingness among customers to shop around - a third of traditional retail banking products sold last year were from institutions other than customers' primary banks, according to the survey.
"The Internet has long underperformed as a sales-channel for banking products, leaving branches as the dominant sales engine. As that calculus changes, market share will be increasingly up for grabs - particularly given consumers' strong tendency to look outside their primary bank for new products," says Wayne Busch, MD, North America banking practice, Accenture.
Meanwhile, services like mobile cheque depositing has helped drive a 50% growth in m-banking use over the last year, with a third of Americans now using it at least once a month.
However, branch networks - which US banks spend around $50 billion a year on - are still seen as important - 60% of all products are still sold in them. Asked which area their banks should be investing in and developing, 38% say branches, behind online at 43% but ahead of ATMs on 21% and mobile, 20%.
According to data from SNL, the US bank branching landscape lost 390 branches in the third quarter. That was roughly on par with the second quarter and marked a greater level of net closures than in the two previous quarters, when branch counts also declined
Accenture says that banks should look to bridge the online and offline worlds by experimenting with smaller, 'light' branches, kiosks and a small number of tech-packed flagship centres to promote the brand.
Mike Goodson, head, management consulting, North America banking practice, Accenture, says: "There is little question that branches remain important in the minds of US consumers today. They are cited as the number one reason for loyalty, and eight out of ten consumers see themselves using branches as often or more often in five years' time.
"But this is changing quickly, as profitability pressures motivate banks to promote less costly and more convenient ways of banking to customers. The rapid rise of mobile banking illustrates how quickly customer behaviours can change through digital technologies."