The Amazing Vaporizing 35%: Banks and Mobile BankingTheodore Iacobuzio |
A recent story in The American Banker about U.S. banks’ interest in mobile payment apps quoted a pretty surprising statistic: “a recent study from fintech vendor Accenture predicts that U.S. banks could lose 35% market share by 2020 to new competitors ranging from small payments firms to Internet giants, like Google, to retailers.”
Wow. Thirty-five percent! That’s serious stuff.
Now, The American Banker is a reputable publication, and the characterization (“could lose 35%”) is strictly speaking accurate. But (the Internet is a wondrous place) click to original release above on the Accenture study and read “Thirty-five percent of banks’ market share in North America could be up for grabs by 2020, as traditional branch banking gives way to digital banking and as new competition emerges [italics mine].”
“Could be up for grabs” sounds a lot less like the day of judgment; and “by 2020” provides further perspective.
Don’t get me wrong, the Accenture story is well worth reading, and the study it’s based on is well worth parsing. It looks at real things, and plots real movement: the study notes that 80 percent of consumers use online banking at least once a month. But how much do you want to bet that that “35 percent” gets inflated into how much banks will lose in share to digital competitors?
And if you read the Accenture piece carefully, some of that share wouldn’t even by definition leave the banking system: “Accenture’s market-analysis indicates that by 2020 an estimated 15 percent of traditional banks’ revenues could shift to online-only players, including branchless banks and new technology entrants.” But a “branchless bank” is, er, a bank, n’est-ce pas? And if a “new technology entrant” decides to act like a bank, won’t it be regulated like one? And wouldn’t that make it a bank?
Again, what the Accenture study points to is real, and a real competitive dynamic: “Another 20 percent could shift to retail-driven players with a mass-market focus—under partnerships between big-box retailers and banks, and potentially independent ventures by retailers.”
Nuclear winter gets reduced to a “potentially”. So much for the big bad 35 percent. And the original American Banker story was about a payment app from….U.S. Bank.
All of this heat and noise in my opinion unintentionally obfuscates the real situation, which is less a threat than a fact of life: competition is increasing pricing pressure, pushing margins down across the payments ecosystem. The question these predictive stories need to answer is: what are we going to do about it?