Thursday, 6 August 2015

KPMG ADMONISHES BANKS TO ADAPT TO DIGITAL WORLD OR DIE

A new study by KPMG has admonished banks to adapt to the digital world to meet the rising demand for mobile banking or die owing to the fact that the number of mobile customers set to increase to more than a quarter of the world’s population.

According to research by investment bank, UBS, and accountancy firm, KPMG, mobile banking usage is expected to be more than double over the next four years, from 800million to 1.8billion people.

Financial Times said that the increase comes as more people constantly use mobile phones and seek efficient ways to transfer money. This has increased competition among established banks, technology giants and digital start-ups as they battle to capture a larger slice of the nascent market.

Owing to this development, experts have warn that traditional banks that are busy maintaining their old technology systems are at risk of losing customers and revenue to nimble digital firms if they fail to offer efficient mobile banking.

David Hodgkinson of KPMG said: “Banks must adapt or die. Mobile banking is clearly supplanting all other channels as the main portal between the bank and the consumer.”

He said although many banks have already ‘risen to the challenge’ and invested in new infrastructure and pioneering initiatives, others need to follow suit to keep up with the pace of change.

Royal Bank of Scotland experienced its second technology glitch in six weeks on Friday, leaving customers unable to access their online and mobile accounts. It comes after a previous systems meltdown in June.

Philip Finch, a researcher at UBS, said traditional banks now consider mobile banking a priority.

In his own word: “Three years ago, banks were questioning how important investing in mobile banking was. Now, everyone is investing in mobile banking. Board commitment is high, which is necessary to allow banks to invest in IT. The global financial crisis, regulations, pressure on revenues and the need to keep costs down has made it tougher for developed market banks.”

Devastating cyber-attacks are on the rise, putting vast amounts of personal and business data at risk. Financial Times examines how banks, companies and governments are trying to mount a concerted fight back against the hackers. So-called challenger banks with new technology systems are spearheading mobile banking initiatives. Atom Bank, for example, is set to launch in the coming months in the UK as the first mobile-focused lender. Certain incumbent banks, such as BBVA in Spain, are at the fore of digital developments, according to the report.

According to UBS’s research, security is another issue, deterring one-fifth of consumers who do not currently use mobile banking. Enticing revenue growth is stoking competition to win market share of mobile banking.

Bank management teams expect average revenue growth of 6 per cent over three years, UBS said. Based on mobile services helping to reduce costs by about 10 per cent a year by 2018 and 6 per cent boost in retail banking revenues, banks could see a rise in return on equity of up to 140 basis. (As seen in Punch)