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Global Retail Banking Trends

Goals

To understand trends in the global retail banking industry by looking at what banks have been doing with their branches as well as by looking at the general global banking trends.

Early Findings

Reduction of Branches

  • At the 25 largest retail banks in the US, deposits "have doubled over the past decade, while their combined branch footprint shrank by 15 percent over the same period."
  • The top 5 US banks have reduced their branches by 15% but were still able to increase deposits by 2.6 times. This reduction in branches is also true for banks in North America and Southern Europe. Across different markets, "the number of branches per million people is declining."

Growth of Digital Banking

  • This reduction of branches is tied to the customers' "willingness to purchase banking products online or on mobile devices." For example, "Nordics are open to digital product purchases for most financial products, compared to 50 to 60 percent in North America and Southern Europe."
  • Some banks have already adopted "digital and remote as their main channels for interaction."
  • Banks in Vietnam have also invested significantly in technology as clients have been seeking "safe and convenient banking services anytime, anywhere."

Growing Importance of Customer Engagement

  • In the US, McKinsey analysis shows that "top-quartile banks in terms of experience have had meaningfully higher deposit growth over the past three years."
  • Retail banks in the US that offer good customer experience "are generating higher growth than their peers by attracting new customers and deepening relationships with their existing customer base." These banks are growing deposits faster.
  • Customers who are highly satisfied with their banking experience "are two and a half times more likely to open new accounts/products with their existing bank than those who are merely satisfied."
  • This trend on the growing importance of customer engagement is also seen in the Vietnam banking industry.






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