The end of Universal bank model?

Published on
26 Jun 2015
Final Author
Roberto Ferrari

Digital disruption is hitting financial services industry.

This is not just about technological changes, it is a profound overhaul of the whole retail banking model and of the way it operates. The whole market structure will change.

Bank branches are getting empty, mobile banking is on a massive rise, FinTech investments and market inroads make the news everyday, changing market dynamics worldwide.

The whole concept of universal bank is being challenged as never before, full service banking model is under heavy attack. Recently Barclays CEO claimed that the “universal bank model is dead”.

Why that?

Many things are changing in retail banking nowadays but there are two key drivers at the very hearth of this change.

They are:

a) high burden from new regulatory demands;

b) digitization and proliferation of digital channels (omnichannel demand).

Both are causing a significant structural increase in operating costs, while posing strong challenges on traditional service and business models of retailing banks.

The whole retailing bank business will be strongly reshaped and new forms of competitive models will be created.

The paper aims at analyzing these key factors, why universal bank struggle to cope with new changes and how this is affecting their long term competitive capacity.

It goes on in defining how the Fintech startups and digital competitors are exploiting that, with the purpose of eating up traditional banking sources of business, targeting specific business lines, unbundling them, bypassing traditional players and creating new marketplaces.

It finishes envisioning how (smarter) banks could move and what will be the most significant trends in the near future coming from the new market and fintech dynamics.