Retail banks face extinction in digital world - Oracle research

Retail banks face extinction in digital world - Oracle research

Retail banks could be on the brink of extinction, claims a new report from Oracle which says that three quarters lack suitable technology to complete the path to a digital world, leaving them vulnerable to new fintech competitors.

Of more than 100 top executives at major retail banks around the world quizzed by Oracle, 94% say that having a digitised omni-channel customer engagement strategy is important to their future success, with a third claiming that success is entirely dependent on this.

Yet there is little confidence among respondents about their ability to meet the threat. Nearly all banks - 88% - say that they face a challenge in overcoming their legacy systems to achieve omni-channel digitisation. The key to beating this problem is the use of new technologies but 75% of bankers cite a lack of suitable tech as another barrier standing in their path to a digital world.

Meanwhile, respondents are worried that new, tech-savvy rivals without complex legacy issues will prove a huge threat within the next five years. Some 29% of those surveyed expect social media networks to be serious contenders for their business by 2020, the same percentage think telecoms companies will be a threat, and 22% retailers.

More than half believe that both private label banks and alternative payment method providers will be major competitive threats - a greater percentage than are worried about other traditional high street players.

When it comes to the services respondents think are important, 90% cite mobile payments and real-time synchronisation. A large proportion also think that providing customers with real-time spend analytics, comparison services and offers via social media are valuable.

Oracle says that these advisory services show that banks must use digital to become more than transactional outfits, positioning themselves as "financial gurus" offering guidance at the tap of a screen.

Yet, despite being recognised as important by over four-fifths of banks, fewer than one in three currently provide real-time analytics, fewer than one in four provide real-time synchronisation and fewer than one in five provide location-driven services.

Oracle blames this on defensive mindsets, with banks focusing on preventing customer defection, complying with legislation and reducing the cost base, rather than actively seeking growth and improvement. Most respondents think the industry will fail to meet the challenge.

Concludes the report: "Failing to meet customers’ expectations is dangerous in any industry; it could be lethal in an environment where the competitive landscape is becoming ever-more congested."

Read the full report here:

Download the document now 416 kb (PDF File)

Comments: (3)

A Finextra member
A Finextra member 14 May, 2015, 02:171 like 1 like

Yup. This is pretty spot on. The challenge I think is so many banks face insitutional inertia, with one division combating against another along product lines, with no real shift in providing a total customer centric service (or even vision). As a result its just stop gap development and breaking out the duct tape to keep things running.

What astounds me more is how many professionals seem to be in awe of this without doing anything about it. Im ready to throw my shoes at the next bank executive I see at a conference explaining how millenials are so strange and offers a story on what their kids do on Facebook as evidence.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 15 May, 2015, 17:32Be the first to give this comment the thumbs up 0 likes

Launch by promising to drive banks out of business. Secure VC funding on the basis of the hype. Grow by selling company's products / services to banks. Exit by selling out company to banks. I thought that was the classical neobank playbook. Curious to know why Oracle is copying it. Oh, wait, I think I know: I got a LinkedIn message from someone recently claiming to start an exclusive Oracle VC company for funding startups.

A Finextra member
A Finextra member 15 May, 2015, 17:41Be the first to give this comment the thumbs up 0 likes

Not really new news. But good stats and information. Should add to the debate about digital banking vs. digital banks.