A report published by Temenos has found that 65% of global banking executives believe branch-based banking will be ‘dead’ within a five-year period.
The report – compiled by Economist Intelligence Unit – is based on a survey of 305 senior global banking executives.
According to Temenos, the research highlights how Covid-19 branch closures, new technologies and increased competition from super-app platforms, tech giants and FinTechs have sped-up digital transformation and triggered a shift in business models and banking priorities.
The report detailed that 65% of global banking executives see new technologies including APIs, cloud and AI as the trends that will provide the biggest impact on the banking sector over the next four years, with changing customer demands and regulation trailing the top three.
Furthermore, 81% of respondents think unlocking value from AI will be the differentiator between winning and losing banks. Likewise, 81% of bankers believe that banks will look to differentiate on customer experience instead of products.
Almost half (47%) of bank executives also said that they expect their businesses to evolve into ecosystems in the next couple of years. This means banks may offer third-party products and services together with their own to customers and other organisations.
The report also found that bankers view microfinance for entrepreneurs and accounts for the unbanked as the most promising inclusion-linked business opportunities – at 34% and 33% respectively.
Temenos CSO Kanika Hope said, “Open Banking and increased competition from big tech and new entrants are causing banks to rethink their business models. Many now aspire to develop digital ecosystems that bring more human, differentiated experiences to their customers using the power of cloud, SaaS and AI.
“This report shows that bankers now understand that technology will be an enabler for these new business models and is critical to their competitive differentiation. Temenos continues to extend its leadership in AI and cloud, serving more than 3,000 banks worldwide, including incumbents and more than 70 challengers. We recently brought to market The Temenos Banking Cloud to help banks digitally transform and take control of their business models and innovation cycles.”
The report can be read in full here.
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