Page 33 - SAMENA Trends - September 2019

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U.K’s Digital Only Banks on Track to Triple

Customers to 35 Million in the Next 12 Months:
Accenture

Digital-only banks operating in the fivefold from around £70 to £350 per at a time when trust in traditional banks
U.K. could amass a total of 35 million customer in the first half of 2019. Digital- is increasing. While digital-only banks
customers globally within the next 12 only banks are also reaping the rewards gain momentum, traditional banks remain
months — up from 13 million today — of improving the customer experience as the preferred primary account holder for
based on current growth rates, according they gain an average Net Promoter Score most consumers. Furthermore, incumbent
to new research from Accenture (NYSE: of 62 compared to just 19 for traditional banks are investing heavily in digital to
ACN) which tracks the performance of UK banks. They also retain a significant cost provide a better experience for customers,
digital banks. In the first six months of advantage with the average operating cost with an initial focus on transforming their
2019 alone, five million people opened an per customer at £20 to £50, compared existing infrastructure, and several are
account with a digital-only bank. Digital- to over £170 for a traditional bank. Tom launching their own new digital banks.
only banks are accelerating customer Merry, managing director at Accenture “Core challenges in terms of balance sheet
acquisition at a current growth rate of Strategy, said: “While digital-only banks scale and funding, risk management and
170% as they launch new products, widen are popular, they are not yet universally compliance cast some doubt over whether
their customer base beyond millennial profitable and customer acquisition alone convenience, customer experience and the
and expand into new markets. A number does not guarantee long-term success or cost advantages of digital-only banks are
have cited that their average customer is competitive agility. These banks evidently enough to ensure long-term success. It
aged around the mid-40s, and many reside show great promise. They have been a remains to be seen whether there will be a
outside of London. These players have also catalyst for positive change in banking, radical overhaul of the banking industry as
increased the average deposit balance but there are deeper issues that need to a result of these new entrants, or simply a
be addressed as they scale.” Challenges continued evolution,” concluded Merry.
impacting digital-only banks include Methodology
the reality that the majority are still not Accenture analyzed market data from a
profitable and are on average losing £9 per representative sample of 30 UK banks.
customer. Account switching remains low All data has been sourced from publicly
across the industry and while digital-only available information, including financial
banks are now gaining primary account reports and media publications. Data is
customers and larger balances, the pace accurate at the time of publication. Growth
of growth is slow. Regulatory hurdles rates for digital banks were calculated
may grow in response to governance and using a 12-month average between H1
control issues these banks face as they 2018 and H1 2019.
scale, which could impact consumer trust

Julie Sweet Assumes CEO Role at Accenture; David Rowland Becomes
Executive Chairman

Julie Sweet has assumed the role of chief executive officer of
Accenture and joined the Company’s Board of Directors. She
succeeds David Rowland, who has assumed the role of executive
chairman after serving as Interim Chief executive Officer since
January 10. Marge Magner, Non-Executive Chair of the Board
since January 10, has resumed her previous role as Lead
Independent Director. These appointments were first announced
on July 11. Since 2015, Sweet has served as Chief Executive
Officer of Accenture’s business in North America, the company’s
largest geographic market. Previously, she was Accenture’s
General Counsel, Secretary and Chief Compliance Officer for five
years. Outside of Accenture, Sweet is a leader on topics including around the world and with key external groups. Throughout his
innovation, technology’s impact on business, and inclusion and 36-year career with Accenture, Rowland has held significant
diversity. As Executive Chairman, Rowland will chair the Board of leadership roles, including serving as CFO from July 2013 to Jan.
Directors, continue to be actively involved in Accenture’s long- 2019, and played a major role in shaping the company’s growth
term business strategy, and represent the company with clients strategy.

33 SEPTEMBER 2019