Disruptive new entrants leveraging technology into retail banking, including various prepaid card providers, have had an impact on traditional banking, and in some ways it’s hastening how quickly banks must adapt.
Online and mobile banking, for example, have alleviated the need to visit branches, while mobile check depositing is reducing the need to visit ATMs. These are today’s issues, what about tomorrow’s?
Despite these current shifts, a new white paper from PwC “Retail Banking 2020: Evolution or Revolution?” contends the traditional bank still has a bright future. And that’s because the fundamental concept of a trusted institution acting as a store of value, a source of finance and as a facilitator of transactions is unlikely to change.
However, the evolving forces of customer expectations, regulatory requirements, technology, demographics, new competitors and shifting economics, will change much of the landscape, according to the report. As such, banks will need to choose the posture to adopt against this change – whether to be a shaper of the future, a fast follower, or to manage defensively by putting off change.
Staying the same, however, is not an option.
“We believe that the winners in 2020 will not only execute relentlessly against today’s imperatives, but will also innovate and transform themselves to prepare for the future,” PwC notes in its report. “This future will require institutions to be agile and open, ready to explore different options in an uncertain world.”
Banks, however, generally are not ready for what’s to meet them. PwC found during its research that fewer than 20 percent of executives felt well prepared for the future. Moreover, 55 percent viewed nontraditional players as a threat to traditional banks. Among CEOs of banking and capital markets, 71% percent of respondents saw cyber insecurity as a business threat, more than any other sector. So how should they react?
In the report, PwC describes the top three challenges and investment priorities by global region, and it delves into the impact of global macro trends on retail banking.
To help banks prepare, the report lists six priorities they should make for themselves for 2020 as they implement and integrate the things they know today, and it delves into each while explaining how best they should be addressed.