The retail banking sector is facing challenges that could determine its future. Our latest report, Clouds Over Retail Banking Revenue, explores these issues and focuses on how banks can adapt to the negative factors affecting their revenues, particularly in the first quarter of 2015.
The report examines the unique challenges facing the sector in 2015 and 2016, including the superimposition of negative macroeconomic and regulatory factors reminiscent of 2009. Despite modest financial growth in the first quarter of 2015, retail banking revenues declined when one-off events were removed.
Factors such as low-interest rates or reduced interchange fees are challenges that banks face daily. Polish banks can treat these variables as a permanent market element, requiring business optimization on both revenue and cost sides.
A key strategy is to tighten pricing and introduce attractive acquisition offers. The report highlights how banks are responding to changing customer expectations, the impact of social media, and negative public perception, which are forcing them to be cautious about aggressive pricing.
The strategic objective is to ‘fight cash,’ which accounts for more than 70% of transactions. Banks should promote cashless payments, which can increase interest and transaction revenues. The reduction of interchange rates and the development of payment acceptance networks are creating new opportunities for banks.
The report also predicts a resurgence of interest in credit cards as an alternative to consumer finance. In the context of the growing popularity of e-commerce and mobile payments, credit cards can be a powerful tool for promoting and building customer knowledge, thereby increasing customer engagement.
Technological change is both an opportunity and a risk. Banks have the opportunity to introduce new functionality and products while reducing operating costs. We estimate that banks can earn more than PLN 300 million in 2016 by releasing new functionalities such as online cash loan sales, instant transfers, invoice payment processing, and personal account bundling.
Discover the strategies and solutions to help retail banking survive and thrive in today’s environment. Get detailed analysis and recommendations to help your financial institution adapt to changing market conditions.
Revision date: 4/06/2024