Major Banks’ Fee-based Revenue at Risk – Study

Increased regulatory pressure and growing competition from new players could cost incumbent banks 5 percent of their revenue over the next three to five years, says a new report from Accenture.

The report presents a quantitative analysis of retail banks’ revenue pools across 12 markets – Australia, Brazil, Canada, France, Germany, Hong Kong, Japan, Italy, Sweden, Spain, the UK and the US – complemented by a survey of nearly 14,900 banking customers across these markets conducted late last year.

The analysis finds that the revenue traditional banks generate from overdraft and other fees, services like cross-border payments and foreign transactions, and penalty charges will erode as a result of both competitive and regulatory pressures.

Competitive pressures will be heightened as a result of new players offering no-fee banking services, while regulatory pressures have emerged in select markets where simpler banking fee structures are being mandated to protect consumers.

“In the markets we analysed, on average five percent of traditional banks’ total retail revenue is at risk if they fail to address their trust deficit,” the report says.

It notes that banks could use innovative technologies, such as artificial intelligence and predictive analytics, to build more personal relationships with their customers and become trusted advisors.

“The economic logic is simple: Better advice leads to better customer decisions, which create more wealth over time — more wealth for banks to help manage,” says Accenture senior managing director Alan McIntyre.

In addition, banks that provide trusted solutions and advice to their customers will boost their reputation and brand image, lower operational risk, and enhance their ability to attract talent.

The full report is available here.

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