New research from Temenos found banks are moving online and
Nearly two-thirds of global banking executives believe that the branch-based model will be “dead” within five years, up from a third (35 per cent) four years ago, according to new research.
The report, which comes from the Economist Intelligence Unit and Temenos, recently surveyed over 300 banking executives, half of whom are at C-suite level.
COVID-19 branch closures as well as new technologies and increased competition from fintechs, super-app platforms and tech giants have accelerated digital transformation and triggered a shift in banking priorities and business models, the report found.
This all spells both trouble for large banks, encumbered with a branch network as well as opportunity to broaden out into an 'ecosystem' approach. iN tandem with the scepticism over the future of physical branches, a similar proportion (65 per cent) of bankers see new technologies as the biggest driver of change for the next four years, up from 42 per cent three years ago.
The report highlights how this large majority of global banking executives view new technologies such as cloud, AI, and APIs as the trend that will have the biggest impact on the sector over the next four years, ahead of regulation and changing customer demands.
Just under half of those surveyed (47 per cent) say they expect their businesses to evolve into ecosystems, involving partnerships with both banking and non-banking third parties.
The report finds that 81 per cent of bankers believe banks will seek to differentiate on customer experience rather than products. With this, many established banks are turning to strategic partnerships and investments in technology to become trusted banking partners and the purveyors of consumer-friendly banking experiences.
Aalishaan Zaidi, Global Head of Digital Banking at Standard Chartered says there is a change in attitude and culture as a result of the pandemic: “The big shift for us was our belief that we could change fast if we really wanted to.”
“We would have never done the partnerships we are doing now [pre-pandemic],” he added.
Kanika Hope, Chief Strategy Officer, Temenos, said: “Open Banking and increased competition from big tech and new entrants are causing banks to rethink their business models. Many now aspire to develop digital ecosystems that bring more human, differentiated experiences to their customers using the power of cloud, SaaS and AI.”