Banks could boost revenues by four percent by embracing digital-first models

If traditional banks adopt new business models used by digital-only players, they will be able to increase their annual revenue by almost four percent, according to the report.

Analysis of the business models of nearly 100 leading traditional banks and more than 200 digital-only players in 11 countries in North America, Europe, Asia-Pacific and Latin America will generate an additional US $ 518 billion by 2025.

Accenture distinguishes two common business models: vertically integrated, traditional business models; And indirect adaptive models in which the bank is “packaged”.

The report said that although many traditional banks have followed the old model, they can make significant progress if they dismantle their traditional products and distribute new personalized products in collaboration with third parties.

In particular, they can increase their annual growth by up to 3.8 percent by placing indirect business models over the traditional vertical integrated model.

According to the report, between 2018 and 2020, digital-only players performed better than traditional banks. However, those who adopted non-linear business models achieved a combined annual growth rate (CRR) of 76%, while those digital players simply copied traditional and vertical integrated models and earned only 44% CAGR.

Accenture recommends a mix of one or four models: banks sell their own products; Building a distribution-driven ecosystem; Selling bank capacity as a service; Or summarize new ideas.

In the UK’s Action Strategy and Advisory Group, MD Dillinsin Bayl said: “Being digital is no longer the difference. He said traditional banks should not only be the best digital versions of their own, but also be able to manage many business models. At once.

“This will require them to change their mindset, taking into account innovative models that put product innovation, embedded distribution, purpose and sustainability at the forefront.”