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Tech firms like Apple, Amazon biggest threat to traditional banks: Study

91% respondents in India expressed their willingness to run their finances through major tech firms rather than banks

BS Web Team  |  New York 

Banking
Routine transactions done online or through mobile cost 20 times less than those requiring bank staff

like Amazon, and are emerging as the biggest challengers to traditional retail banks, which until recently relied on nimble financial technology solutions to upend the industry. Even as struggle to migrate transactions from their branches and call centres to digital channels, for reducing costs and meeting customer expectations, consumers are now increasingly preferring technology majors for financial services, finds a study by
 
In its eighth annual study, in partnership with Research Now to survey more than 133,000 consumers in 22 countries, Bain found that at least half the respondents across most countries preferred buying a financial service from a technology company. In India and Mexico, 91 per cent and 81 per cent of respondents, respectively, expressed their willingness to run their finances through major rather than

 
Consumers in the US and UK trust and with their money more than they trust In China, 88 per cent consumers said they would bank with a tech firm.
 
have innovative products, but they struggle to build brand recognition or a distribution model that attracts many customers,” said Gerard du Toit, head of Bain’s Banking Practice and lead author of the report. “Large already have digital prowess, established brand and customer access, which provide an almost unassailable advantage in extending their corporate brands into banking. Many already sell payment services, credit cards and loans, so it is plausible they will offer a suite of services in the near future.”
 
Bain’s research found that routine transactions done online or through mobiles cost 20 times less than those requiring bank staff. In Mexico, for instance, top five could save more than $500 million in running traditional banking and phone channels by following best domestic and international technological benchmarks.
 
Most respondents to the study said and websites fell short of in convenience, multi-functionalilty, and ease of use. Only 45 per cent of UK respondents said their primary bank’s website allowed them do everything they needed. The share was even lower for banks’ mobile apps.
 
Traditional have also barely touched some of the newer technologies like virtual reality and personal voice assistance, through means like Alexa, and Google Assistant, to supplant bank call centers.
 
that accelerate the development of digital channels to handle routine transactions – ultimately migrating them out of expensive branches and call centers – gain customer confidence and a cost advantage that will better equip them to compete with tech firms, the Bain study found.
 
“The more transactions that digital channels are able to accommodate seamlessly, the more customers will use them instead of the call center or branch. And the reduction in ‘bad’ call and branch volumes allows to reinvest more to further improve digital channels, while reserving their employees for the thorniest problems,” said du Toit.

Bain study

First Published: Tue, November 21 2017. 18:32 IST
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