Mobile banking has increased 50% in the U.S. since last year and is one of several innovations poised to change the way Americans conduct financial transactions in the future, according to new research published last week by Accenture, a global management consulting, technology services and outsourcing company.

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

“Digital technology and rapid changes in customer preferences are threatening full-service banks that do business primarily through branches,” said Wayne Busch, managing director of Accenture's North America banking practice. “Given the scale of these disruptions, traditional full-service banks, as a group, could lose significant market share by 2020 – to banks that re-orient around digital technologies and to new entrants from the retail and technology sectors. Our research shows signs of this already occurring.”

Here are some highlights from the Accenture research:

Nearly one-third of U.S. consumers (32%) conduct financial transactions using mobile devices at least once a month, according to the survey.
Over the past year, online sales in traditional banking products have experienced double- and triple-digit growth, amidst declines 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 sales dropped nearly 10%.
Online sales also increased in checking, savings, personal and home equity loans and money market funds.
Only 9% of survey respondents switched banks last year.
More than one-third (34%) of traditional retail banking products sold last year were from institutions other than customers' primary banks.
Online banking was cited as the number one area in which banks should be investing (cited by 43%), overshadowing branches (38%).

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

The research also forecasts more changes, especially with branches.

“There is little question that branches remain important in the minds of U.S. consumers today,” said Mike Goodson, a managing director and head of management consulting for Accenture's North America banking practice.

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

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

Accenture analysts propose a lighter, more diverse branch banking model to maintain sales, while better enabling digital banking. Proposals include:

'Light' branches. Less than one-third of the network comprising “light” branches that are oriented to sales. These are highly automated with a small staff and real estate footprint focused on sales and providing access to remote advisory specialists.
Kiosks. A higher ratio of kiosks – up to half the network – geared to routine account services situated in malls and transport hubs. These are cashless and feature advanced ATMs, with video, allowing customers to connect and transact with remote staff.
Full-service 'hubs'. Like conventional branches but fewer in number, these offer full sales and service support with extended hours, including specialized advisers for things like mortgages and trading.
Flagships. A small number of strategically located flagships to act as centers of sales and service excellence that promote the bank's brand and introduce new offerings and self-service tools.

“Branches remain vital to banks, but they need to be reimagined as one aspect of a radically new approach to consumers,” Goodson said. “This is not just an opportunity for banks to recover profitability and reduce costs. It is an opportunity to establish a much more sustainable relationship with customers and better retention of market share into the future.”

Instant Insights /

Accenture Rx: More Mobile, More Agility in Branches

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