Branchless Banking: The Opportunities and Risks for Traditional Banks

Date: 2015-11

A growing number of branchless, digital-only banks have entered the market in recent years. With their lower overheads and more modern technology, they have the potential to threaten the dominance of established providers. These more traditional banks will have to respond to make sure they are not sidelined.

– Understand the nature of the challenge posed by the new breed of branchless banks.
– Learn how branched banks can leverage their traditional strengths to compete effectively with the newcomers.
– Understand what factors are causing some consumers to switch to digital banks, and how established banks should respond.

– In what ways do new, digital-only banks most threaten the position of established providers?
– What aspects of traditional banks most appeal to consumers, and how can such banks take advantage of these preferences?
– What steps do traditional banks need to take to retain the loyalty of those consumers most likely to defect to branchless banks?

Key Highlights
Traditional banks can be left vulnerable by their reliance on old and complex technology. This not only leaves them at greater risk of service outages, but limits their ability to introduce new services in a timely manner. In contrast, digital-only banks can launch new features and facilities in much shorter timescales.

Despite the growing popularity of digital channels, most consumers still prefer branches for initiating new relationships and conducting more complex activities. The majority of consumers also regard financial stability and a long-term reputation as key factors in their choice of provider.

Branched banks can neutralize the threat from digital-only entrants by acquiring them. This will also allow them to embed the customer-centric, innovative, and responsive philosophy of these acquisitions into their own culture. This strategy will often prove to be less costly and time-consuming than creating a separate digital brand from scratch.”

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