STAMFORD, Conn.--(BUSINESS WIRE)--By 2025 leading banks will be operating as digital financial superstores that blur the line between technology companies and banks, according to a new report from Greenwich Associates.
The Future of Banking: 2025 – Rise of Digital Banking Superstores traces the changes in the banking industry since the global finance crisis and projects the course of its evolution.
The influence of the digital consumer experience is quickly and dramatically reshaping expectations across all banking interactions. With tech and retail sites setting new standards, customers increasingly expect interactions with their banks to be easy, fast, transparent, and done on their own terms.
Enter the NonBanks
Banks’ troubles have created an opening for nonbank lenders and fintech providers that leverage cutting-edge technology and their largely unregulated status to deliver the type of service and experience consumers have come to expect from the best Internet and mobile sites.
“These pressures are pushing banks inexorably toward a new model,” says Don Raftery, Greenwich Associates Managing Director and author of the report. “Today banks feel analog in an increasingly digital world. Within the next decade, the leading banks will feel and operate more like tech companies with banking licenses.”
Digital Banking Superstores
That new model will take shape by, if not before, 2025, when the industry arrives in what Greenwich Associates dubs “The Age of the Digital Banking Superstore.” Stripped of their technology advantage (and their regulatory advantage as well, assuming regulators act appropriately):
- Nonbanks will cede clients and share of wallet to the banks, and clients will rediscover the benefits of one-stop shopping with large banks.
- These benefits will not be just marketing hyperbole, but real advisory driven insights to help clients by better leveraging technology and data.
- Many major fintech and nonbank providers will be acquired by banks in the coming years, further enhancing and accelerating banks’ technology prowess.
- Regional banks will struggle to keep up with mounting costs of IT investments for client benefit instead of regulatory/risk mitigation, while small and community banks attempt to leverage white-labeled technology from third-party providers to maintain their own value propositions.
“Even in more developed and heavily regulated markets like the U.S. and Europe, virtually the only thing standing between banks and giants like Google and the telecom providers will be a banking license,” says Don Raftery.