Mobile banking has increased 50% in the U.S. since last year andis one of several innovations poised to change the way Americansconduct financial transactions in the future, according to newresearch published last week by Accenture, a global managementconsulting, technology services and outsourcing company.

As traditional branch banking gives way to digital banking, new competition is emerging and 35% oftraditional banks' market share in North America could be up forgrabs by 2020, according to Accenture's market analysis.

“Digital technology and rapid changes in customer preferencesare threatening full-service banks that do business primarilythrough branches,” said Wayne Busch, managing director ofAccenture's North America banking practice. “Given the scale ofthese disruptions, traditional full-service banks, as a group,could lose significant market share by 2020 – to banks thatre-orient around digital technologies and to new entrants from theretail and technology sectors. Our research shows signs of thisalready occurring.”

Here are some highlights from the Accenture research:

• Nearly one-third of U.S. consumers (32%) conduct financialtransactions using mobile devices at least once a month, accordingto the survey.
• Over the past year, online sales in traditional bankingproducts have experienced double- and triple-digit growth, amidstdeclines in branch sales.
• Sales of mortgages via the Internet increased 75%.
• Sales at branches fell 16%.
• Online sales of auto loans nearly doubled, while branch salesdropped nearly 10%.
• Online sales also increased in checking, savings, personal andhome equity loans and money market funds.
• Only 9% of survey respondents switched banks last year.
• More than one-third (34%) of traditional retail bankingproducts sold last year were from institutions other thancustomers' primary banks.
• Online banking was cited as the number one area in which banksshould be investing (cited by 43%), overshadowing branches(38%).

“The Internet has long underperformed as a sales-channel forbanking products, leaving branches as the dominant sales engine,”Busch added. “As that calculus changes, market share will beincreasingly up for grabs – particularly given consumers' strongtendency to look outside their primary bank for new products.”

The research also forecasts more changes, especially withbranches.

“There is little question that branches remain important in theminds of U.S. consumers today,” said Mike Goodson, a managingdirector and head of management consulting for Accenture's NorthAmerica banking practice.

“They are cited as the number one reason for loyalty, and eightout of 10 consumers see themselves using branches as often or moreoften in five years' time. But this is changing quickly, asprofitability pressures motivate banks to promote less costly andmore convenient ways of banking to customers. The rapid rise ofmobile banking illustrates how quickly customer behaviors canchange through digital technologies.”

The top 25 U.S. banks spend more than $50 billion per year tomaintain branch networks, where approximately 60% of all productsare sold, Accenture said.

Accenture analysts propose a lighter, more diverse branchbanking model to maintain sales, while better enabling digitalbanking. Proposals include:

• 'Light' branches. Less than one-third of thenetwork comprising “light” branches that are oriented to sales.These are highly automated with a small staff and real estatefootprint focused on sales and providing access to remote advisoryspecialists.
• Kiosks. A higher ratio of kiosks – up to halfthe network – geared to routine account services situated in mallsand transport hubs. These are cashless and feature advanced ATMs,with video, allowing customers to connect and transact with remotestaff.
• Full-service 'hubs'. Like conventionalbranches but fewer in number, these offer full sales and servicesupport with extended hours, including specialized advisers forthings like mortgages and trading.
• Flagships. A small number of strategicallylocated flagships to act as centers of sales and service excellencethat promote the bank's brand and introduce new offerings andself-service tools.

“Branches remain vital to banks, but they need to be reimaginedas one aspect of a radically new approach to consumers,” Goodsonsaid. “This is not just an opportunity for banks to recoverprofitability and reduce costs. It is an opportunity to establish amuch more sustainable relationship with customers and betterretention of market share into the future.”