About 17% of US banking revenue now comes from digital banking and this trend shows no sign of stopping, according to Accenture. With the industry rapidly changing, however, banks will need to offer something truly new in their pricing.
Does your pricing model fit digital?
Product-based pricing has its limitations when it comes to optimizing margins and truly differentiating the customer proposition, two key elements of running a successful digital relationship manager business model, Accenture says.
In the wake of digital disruption, incumbents will probably switch to a model that wants to be most things to most customers and relies on a mix of fees and balance sheet spreads for income. As digital squeezes fees, net interest margin will more and more become the focus of attention.
Amazon is building a bank for itself
The e-commerce giant is attacking financial services from every angle. In a recent report, CB Insights has given the lowdown on its foray into financial services. The tech titan has already made moves in payments, cash and lending services, and news have leaked that it was in talks with banks to build a product similar to a checking account.
But CB Insights says Amazon isn’t building a traditional bank that serves everyone. Instead, it wants to use the core elements of modern banking services to serve Amazon merchants and consumers, and continue to make buying and selling smoother on its platform.
Three data trends to watch
Three megatrends are on the rise to transform banking in the next 12 months or so, according to Christopher Truce, Head of Fintech at Saxo Bank Group.
The first one is rapid service digitization: banking services are more and more wrapped into third-party value propositions, meaning banks risk losing control and visibility of client data and relationships. The second megatrend is regulatory support for open banking, while the third one is the shifting power in the new distributed data model of financial value.
Monzo’s losses more than quadruple
Digital-only bank Monzo’s losses more than quadrupled to £33.1 million in its first year operating with a full licence. The figures show that Monzo has made slow progress in encouraging customers to adopt them as their primary bank, the Financial Times has reported.
The disruptor’s increased losses highlight the challenges facing the wave of mobile phone app-based lenders trying to take on established groups, FT adds.