IBS Journal April 2016


Half of retail banks predict end of branches by 2020


Retail banks believe that the traditional branch will have disappeared in five years’ time, with the banking world so strongly shaped by technology that branch-based services won’t be needed at all. This is according to research from The


Economist Intelligence Unit and Temenos, who have released their third annual report on the subject of retail banking. Banking respondents in the survey saw


three main areas that need to change for retail banking to remain relevant by the year 2020. 36% perceived that changing the branch was key, while 35% and 31% highlighted the need for getting the right talent and modernising their technology respectively. In terms of the main threats to the sec-


tor, there was an even spread. Technology companies like Apple grabbed 20% of the banker’s minds, while another 20% was reserved for other non-financial groups. Surprisingly, challenger banks are seen as less of a worry, with only 16% of bankers selecting them as a concern. In a media briefing in London,


Monica Woodley, Editorial Director for EMEA Content Solutions at the Economist Intelligence Unit, pointed to emerging technology as a “higher value area”. Threats to banks are coming from multiple angles, she added, especially from firms like Google and Apple. When asked by IBS Journal whether banks had become complacent over their acceptance of Apple Pay as the go-to con- tactless method, attendees at the briefing, including Temenos Chief Marketing and Strategy Officer, Ben Robinson, agreed. Robinson shared some doubts on the


conclusions of the study, however. In his mind the traditional branch will not disap- pear completely from streets, and we can be reasonably optimistic as to its future. Banks should be prepared to meet the


digital challenge head on, added Woodley. Through the creation of sandbox environ- ments and testing groups for technology like blockchain, she states, banks are finally beginning to shift from a reactionary stance to a pragmatic one. David Arnott, CEO at Temenos, said:


© IBS Intelligence 2016


“Our study shows that banks have clearly woken up to the threat FinTechs pose to their business. Last year we found that regulation and compliance were receding as threats. This year we can see that that trend has accelerated.” He added: “The banks’ response is to


look at ways of beating the FinTechs at their own game. This may be partnering or co-operating with service providers, or investing in their own digital platforms.” Fully automated branches will be the


order of the day in 2020, according to respondents, with 64% choosing that as the most likely outcome. The study was based on a survey of


more than 200 global retail banking execu- tives, with just over half at C-level. “The digital revolution has moved


from existential threat to potential survival strategy for the world’s retail banks,” noted Woodley. “Strategically banks have a number of responses. The correct path is not yet clear-cut.”


Alex Hamilton www.ibsintelligence.com 19


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