The banking industry is going through what could be one of the most significant periods of change in its history.
Rapid growth in mobile and digital technology has given consumers more ways to bank than ever before, while the emergence of fintechs and challenger banks is forcing established financial institutions to innovate or risk being left behind.
Furthermore, there are some major regulatory changes on the horizon – such as PSD2 – that are set to enable further competition and drive the development of new business models in financial services.
According to Deloitte, the wave of change currently sweeping the industry will bring about a “revolution” in consumer finance, with traditional banking models set to experience a “dramatic overhaul” during the next ten years.
The professional services firm stressed that the success of new products and services in competitive sectors like retail banking is ultimately determined by the consumer demand for them.
Its research suggested the appetite is there for innovations that could revolutionize the industry. Nearly six out of ten mobile banking customers surveyed (58 percent) said the ability to complete more actions through their app would be a key factor in persuading them to switch to a mobile-only bank.
Around half (49 percent) of respondents said they would trust a banking app from a digital payments provider, while 43 percent would be willing to use an app from a traditional retailer.
Neil Tomlinson, head of UK banking at Deloitte, said: “A range of fintech and non-bank entrants are already offering services that directly compete with incumbents. Open banking could ultimately challenge who owns the primary customer relationship.”
Mr Tomlinson acknowledged that established banks are facing greater competition than ever, but the changes taking place across the industry could also present exciting opportunities for innovation and diversification.
“Those that embrace [open banking] have the potential to create new sources of revenue and new, highly tailored products, services and solutions. It is this personalization that will create a deeper and more engaged customer relationship.”