The new study shows that the traditional banking system is likely to experience a huge decline in the following five years, driven by customers move towards challenger banks. Revolut and Monzo could become the future leaders due to their innovative digital offerings and extensive customer base.
1 In 10 Banks Will Disappear
The global management consultancy A.T. Kearney revealed that despite European retail banks profits are standing at an all-time high, the top line stagnates close to positive 1%. A.T. Kearney’s used data from 92 banks across Europe – which shows a dramatic drop in income per client (-1.1% 2018 vs 2017; -11% 2018 vs 2008).
Above all, the branch count declined by 24.6% since 2008. The decline in income per client along with the closure of branches is blamed on increasing consumer demand for digital banking that offers multiple personal finance services.
Challenger Banks Will Replace Traditional Banks
The rise of challenger banks in Europe is one of the major reasons for the potential collapse of traditional banks.
The star players like Revolut and Monzo are well set to lead the industry. Revolut has already achieved 4 million customers and the bank is aggressively looking to expand its foot-prints in European and Asian markets.
On the other hand, Monzo is currently serving 2 million customers; it has been adding 35000 customers every week.
These banks offer digital products such as current account, savings account, budgeting, spending tools, debit cards, and several other personal finance products. The study shows that customer base of challenger banks already crossed 15 million mark, while traditional banks have lost 2 million customers since 2011. The study indicates that almost 85 million Europeans will switch to challenger banks in the following five years – the majority of the young population would look towards challenger banks for their financial needs.