1 In 10 Banks Will Disappear over the Next 5 Years, According to A.T. Kearney
A ten-year study from global management consultancy A.T. Kearney has found that the profit of European retail banks/divisions is at an all-time high, driven by a positive economic environment and lower risks (risk costs relative to total income at lowest level 5% compared to 12% in 2008).
Yet, the topline stagnates at (+ 1% in western Europe). A.T. Kearney’s ‘Retail Banking Radar 2019’ analyzes data from 92 banks across Europe and found that despite continued strong growth in volumes, income remains weak with a dramatic drop in income per client (-1.1% 2018 vs 2017; -11% 2018 vs 2008). Meanwhile, a quarter (24.6%) of bank branches across Europe has closed since 2008.
The study shows that the industry faces a critical transformation amidst rising consumer demand for digital banking and the growing possibilities of open banking, revealing four key areas:
- Redefine target operating models, accelerate cost reduction and introduce new agile ways of working
- Rebalance the organization both in terms of headcount and skills in the context of a changing branch paradigm
- Prioritize customer experience as a way to retain and grow income
- Embrace open banking, artificial intelligence and partnerships
Simon Kent, partner and global head of Financial Services at A.T. Kearney comments:
“Our ten-year study shows that whilst the industry is stronger, it is stagnating. Not all banks will survive the tide of change as customers increasingly favor digital banks and innovative products and services. Branch closures is a short-term fix to steady the books but it is not enough – traditional institutions need to consider strategic transformation to improve cost and top line and also offer more innovative products and services if they are not only to survive – but thrive – in the new retail banking landscape beyond 2019.”
The rise of “neobanks”
The rise of so-called “neobanks” in Europe offering solely digital products has led to customers increasingly heading to these new models in favor of traditional retail banks. The Radar showed that neobanks’ customer bases across Europe have grown by over 15 million since 2011, compared to a decrease in 2 million customers for retail banks. Up to 85 million Europeans will be customers of these banking models by 2023 according to the study – which equates to around 20% of the population over 14 years old.
Indeed, some ‘star’ neobanks such as the UK’s Revolut already have upwards of 4 million customers, and with several newcomers already hitting the market in 2019, these banks are catching up with traditional bank offerings. Others, such as Monzo, are planning expansions into other markets including the United States, showing the popularity of these models on a global scale. Ultimately, this has been one of the driving forces in the closure of bank branches across Europe.
The impact of Open Banking
Perhaps surprisingly, the Radar also showed that up to 50% of European customers are ready to share personal data with their banks. Under initiatives like the Second Payment Services Directive (PSD2), Open Banking has meant more information sharing between banks, third parties, and their customers – and it looks like consumer trust is growing to want this collaboration.
A trend revealed in the study is the transformation of traditional banks into lifestyle platforms, becoming a ‘one stop shop’ for customers’ daily needs – purchasing, travel, entertainment, utilities etc, even integrating social media into these solutions to provide a true lifestyle experience.
Daniela Chikova, partner at A.T. Kearney comments:
“The shift towards digital banking, only compounded by the introduction of Open Banking, has caused a transformation in how and where customers want to bank. They’re more open to sharing their data with third parties, have greater trust in banks’ ability to hold their data safely and, particularly amongst younger generations, don’t have a need for in-branch banking any more. Open Banking has been a key driver in banking innovation, and we expect this to continue into September as the new Regulatory Technical Standards come in.”
Notes to editors
About the Retail Banking Radar 2019
The Retail Banking Radar 2019 tracks 92 retail banks in 22 European markets, comprised of 50 banks in Western Europe and 42 banks in Eastern Europe. The data is taken from official bank records from January 2007-December 2018, including annual figures, forecasts and Q3 2018 results, and publicly available industry data.
About A.T. Kearney
A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since 1926, we have been trusted advisors to the world's foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission-critical issues. For more information, visit www.atkearney.com.
020 7440 8670
About Business Wire
For more than 50 years, Business Wire has been the global leader in press release distribution and regulatory disclosure.
Subscribe to releases from Business Wire
Subscribe to all the latest releases from Business Wire by registering your e-mail address below. You can unsubscribe at any time.
Latest releases from Business Wire
The We Company Q2 2019 Financial Results Conference Call19.8.2019 21:56:00 EEST | Press release
WeWork Companies LLC (the “Company”), with respect to its 7.875% Senior Notes due 2025 (the “Senior Notes”), will hold a conference call on Monday, August 26, 2019, at 12:00 P.M. Eastern Time for the benefit of certain qualified participants in order to discuss the Company’s financial results for the second quarter of 2019. Current holders and beneficial owners of the Senior Notes, bona fide prospective purchasers of the Senior Notes who are qualified institutional buyers (as defined in Rule 144A under the Securities Act of 1933) or non-U.S. persons (as defined in Regulation S under the Securities Act of 1933), securities analysts, and market-making financial institutions may gain access to the call information for the conference call by registering on the Company’s secure website at investors.wework.com. Additional information about the call (including dial-in number) will be provided on the secure website. Parties requesting access to the Company’s secure website will be required to
BAI Announces 2019 Global Innovation Award Finalists19.8.2019 20:50:00 EEST | Press release
BAI announced the finalists for the 2019 BAI Global Innovation Awards, the industry’s most prestigious awards program that celebrates transformative solutions in the financial services industry worldwide. Now in its ninth year, the BAI Global Innovation Awards recognizes leading financial services organizations on a global scale. Through hundreds of applications, the Innovation Circle, a panel of global financial services innovation leaders who thoroughly review each application, determined the top submissions. The judges weigh each innovation on originality and impact on consumers and the industry. This year’s finalists showcase what leading financial services innovators in all regions of the world are doing to deliver new value to customers and employees, as well as improve efficiencies and profitability for their organizations. The 2019 BAI Global Innovation Awards finalists are: Best Application of Advanced Technology in a Product or Service Emirates NBD, Dubai, United Arab Emirate
Rimini Street Statement on U.S. Appeals Court Ruling19.8.2019 16:00:00 EEST | Press release
Rimini Street, Inc. (Nasdaq: RMNI), a global provider of enterprise software products and services, the leading third-party support provider for Oracle and SAP software products and a Salesforce partner, today issued the following statement in response to the August 16, 2019 ruling by the U.S. Ninth Circuit Court of Appeals in the Oracle v. Rimini Street litigation which was filed in January 2010, went to trial in 2015, and has been on appeal since: “We are pleased that the Appeals Court again corrected legal errors in the District Court’s post-trial orders, adding to the Appeals Court’s and Supreme Court’s prior reversals in this case and refunds from Oracle totaling over $34 million. Oracle lost 23 of 24 claims it originally pursued against Rimini Street in this case, with the jury finding that Rimini Street engaged in “innocent infringement” on the remaining claim. Rimini Street had voluntarily stopped using the legacy processes that were found to be infringing before the 2015 trial
OpenGate Capital Announces Acquisition of Majority Interest in InRule Technology, Inc.19.8.2019 15:00:00 EEST | Press release
OpenGate Capital, a global private equity firm, announced today that it has acquired InRule Technology, Inc. (“InRule”), a market-leading decision management platform and business rules management system (BRMS). OpenGate is pleased to partner with the co-founders of InRule to continue innovation and leadership in the decision management market. This transaction marks the fifth investment completed in 2019 through OpenGate Capital’s second institutional fund. Financial terms were not disclosed. InRule software powers mission-critical decisions for enterprise and government customers. InRule provides an end-to-end, fully auditable platform that acts as a “single source of truth” for enterprises processing complex business rules and decision workflows. Its decision platform drives significant and quantifiable business value across a variety of use cases, including insurance eligibility, mortgage qualification, risk rating and fraud reduction, regulatory compliance, healthcare claims proce
Cogeco Peer 1 Changes Name to Aptum Technologies; Adds New Services to Enhance and Expand Hybrid Cloud Offerings19.8.2019 15:00:00 EEST | Press release
Cogeco Peer 1, a managed hosting and cloud services provider, today announced it has changed its name to Aptum Technologies. The move follows the April 2019, acquisition of Cogeco Peer 1 by Digital Colony, a global investment firm dedicated to strategic opportunities in digital infrastructure. This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20190819005121/en/ Susan Bowen, CEO of Aptum (Photo: Business Wire) “Aptum means ‘adaptability’ and reflects our heritage and vision for the future,” said Susan Bowen, Chief Executive Officer of Aptum. “As businesses face exponentially increasing volumes of information, and data becomes an integral part of their infrastructure, technology platforms must adapt and harness the power of data to enable better decision making, risk evaluation and customer engagement. We help organizations unlock the potential of their data by providing a robust infrastructure that enables customers to solve compl
Slate Asset Management Announces Minority Investment From Goldman Sachs Asset Management’s Petershill Program19.8.2019 15:00:00 EEST | Press release
Slate Asset Management L.P. (Slate), a leading alternative asset management platform with a focus on real estate and real assets, today announced a passive, non-voting minority equity investment from Goldman Sachs Asset Management’s Petershill program, creating a strategic relationship with one of the world’s leading investment managers and positioning Slate for future success. The transaction will have no impact on the control or decision making of Slate. The day-to-day operations and management of Slate will remain unchanged. The investment provides capital that Slate will use to enhance its platform and increase its GP investments in current and future businesses and investment vehicles, further strengthening the firm’s alignment with its clients and investing partners. The investment accelerates Slate’s goal to build the leading independent alternative investment platform in real estate and real assets. As part of the transaction, Slate Founders Blair and Brady Welch have made a lo
In our pressroom you can read all our latest releases, find our press contacts, images, documents and other relevant information about us.Visit our pressroom