The New Digital Tipping Point


January 19, 2012

Since readers of DealMarket Digest are already early adopters of online platforms and services, we chose to digest a report about how banking is following that trend too.


PWC says in a report published this week that digital banking is set to overtake branch networks as the main way customers interact with their bank by 2015. The report finds that banks are “missing a vital new source of revenue growth as they have been too slow to respond to the digital innovations that have radically changed business models and redefined customer experience”.


And they are doing it in the face of strong demand for digital banking products from consumers and the fact they are willing to pay.

PwC conducted research with over 3,000 banking customers across nine developed and emerging markets and found that most consumers are willing to pay up to GBP 10 a month for digital banking services if they believe they offer convenience and value.
The research reveals that there is customer demand for innovative digital offerings such as social media notifications, an electronic wallet for loyalty cards and financial tools provided by banks and that these are the products consumers are most willing to pay forSelected
Survey Findings
– In the UK, almost two thirds (65%) of respondents said they are willing to pay just over £4 a month for their bank to store loyalty card information and convert accumulated points into cash. This amounts to an annual fee income for banks of approximately GBP 50 per customer.
– Online and mobile channels are increasingly used by consumers to access financial products. 69% of those surveyed said they currently use the internet to purchase financial products.
–  Some 33% use mobile to purchase financial products, but mobile banking is expected to follow a similar usage curve to internet banking, with China, India and the United Arab Emirates currently leading its adoption.
– Generation Y leads the way, with 67% of respondents saying they currently use or are considering using mobile channels for banking.
The report suggests that new entrants, such as mobile payment providers, will continue to act as a catalyst for change in the retail banking space. Dealmarket Digest checked out the trend in the news sources and found some examples. Just this week alone, India’s ICICI bank announced that it is offering access to account information via Facebook, as reported by Bizmology.
And in Turkey Ödeme, a mobile payments innovator, raised capital from a new UK-based PE fund called Mediterra Capital Partners, which acquired a majority stake, according to AltAssets. The Turkish company enables users to make payments via mobile phones, credit cards or pre-paid game cards. The Mikro Ödeme platform is free of charge for users.

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