The rise of Generation Z, the boom in financial services from Google, Amazon and Apple, or the emergence of innovative FinTech firms - traditional brick-and-mortar banks are under more pressure than ever before. If they don't start to fully embrace the digitisation of their services in the near future, they are likely to face tough times ahead.
Digital banks on the rise
According to Oracle research, 69% of customers today want to handle their financial services online. And that number will grow, with nearly 2 million Generation Z adults in the Czech Republic in 10 years. While only one per cent of older generations use digital banking services, nearly half of the youngest Gen Zers do.
Demographic changes are not the only threat to traditional banks. FinTech companies such as Revolut and Twisto have entered the financial market in recent years and are light years ahead in terms of digitalisation. Technology giants such as Google and Apple, with their Google Pay and Apple Pay services, are also stealing profits from banks.
For these reasons too, fully digital banks are emerging on the market. And they’re certainly no dwarfs in the shadow of the big banks. Starling Bank, for example, beat giants such as HSBC and Barclays in both the 2019 and 2020 Best Bank in Britain competitions. Analyst firm Accenture estimates that the UK’s digital banks have tripled the number of their clients from autumn 2019 to autumn 2020.
The traditional strength of brick-and-mortar banks is no longer enough
Until now, strong brick-and-mortar banks have relied on their tradition, capital and large number of clients. But that is no longer enough. The willingness of people to change banks is increasing and every year more than 10% of Czechs change their main bank due to dissatisfaction. People’s loyalty to companies and institutions is getting lower and lower.
Many banks are aware of this, of course, but their hands are often tied. The digitisation of outdated IT infrastructure that banks have been building for decades cannot be managed with a snap of the fingers. Yet there are ways it can be done in just a few months.
Wondering how?
Download our whitepaper on digitising the banking sector, in which we’ve written more about the topic. Among other things, you’ll find examples of banks that have recently gone digital successfully. And the short- and long-term benefits of digitisation.