GENEVA, Switzerland – Sixty-five percent of global banking executives believe branch-based banking will be “dead” within five years, according to a new report.
The report from Temenos and authored by its Economist Intelligence Unit (EIU), “Branching out: can banks move from city centres to digital ecosystems?” is based on a recent survey of 305 senior global banking executives.
According to the company, the research highlights how COVID-19 branch closures, 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 that 65% 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. Moreover, 81% believe unlocking value from AI will be the differentiator between winning and losing banks.
Other Findings
Other findings include:
- 81% 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.”
- The pandemic has been a catalyst for collaboration and experimentation. The report states that nearly half (47%) of bank executives expect their businesses to evolve into ecosystems in the next two years, whereby banks offer third-party products and services, together with their own, to customers and other financial organizations.
- Findings show that bankers view microfinance for entrepreneurs (34%) and accounts for the unbanked (33%) as the most promising inclusion-related business opportunities.
Rethinking Models
“Open Banking and increased competition from big tech and new entrants are causing banks to rethink their business models,” said Kanika Hope, chief strategy officer with Temenos. “Many now aspire to develop digital ecosystems that bring more human, differentiated experiences to their customers using the power of cloud, SaaS and AI. This report shows that bankers now understand that technology will be an enabler for these new business models and is critical to their competitive differentiation. Temenos continues to extend its leadership in AI and cloud, serving more than 3,000 banks worldwide, including incumbents and more than 70 challengers. We recently brought to market The Temenos Banking Cloud to help banks digitally transform and take control of their business models and innovation cycles.”