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the latest ANALYTICS or ig i nat ion Technophobic Banks at Risk of Losing Market Share se r v ic i ng Accenture suggests slow adopters could lose up to 35 percent of their grasp over the next few years. T S e c on da r y M a r k e t a na ly t ic s raditional banks stand to lose as much as 35 percent of their market share by 2020 if they don't adapt their business to the changing technological landscape, consulting firm Accenture suggests in a market analysis report. 54 | The M Report According to Accenture's research, an estimated 15 percent of traditional banks' revenues could shift to online-only players—including branchless banks and new technology entrants—in the next seven years as more consumers flock to technology-driven services, while another 20 percent could go to "retail-driven players with a mass-market focus." "Digital technology and rapid changes in customer preferences are threatening full-service banks that do business primarily through branches," said Wayne Busch, managing director of Accenture's North American banking practice. "Given the scale of these disruptions, traditional full-service banks, as a group, could lose significant market share by 2020—to banks that reorient around digital technologies and to new entrants from the retail and technology sectors." Busch says the company's research has found signs of this shift already occurring: According to the company's findings, the last year alone has seen a 50 percent increase in mobile banking activity and double- and even tripledigit growth in online sales of traditional banking products—all while branch sales declined. The trend is perhaps most visible in the mortgage world, which experienced a 75 percent increase in sales via the Internet and a 16 percent drop in branch activity in the last year. "The Internet has long underperformed as a sales channel for banking products, leaving branches as the dominant sales engine," Busch said. "As that calculus changes, market share will be increasingly up for grabs—particularly given consumers' strong tendency to look outside their primary bank for new products." With the nation's top banks spending more than $50 billion each year to maintain their branch networks, Accenture suggests a new model to reduce costs, maintain sales, and better enable digital banking. For one, Accenture proposes that banks operate a portion of their network as "light" branches that feature higher automation and smaller staff and that are geared more toward sales. There would still be a small number of strategically located "flagships" operating as sales and service centers, allowing banks to promote their brands and introduce new offerings and self-service. Another portion of the network would consist of full-service "hubs" offering full sales and service support, including specialized advisers for offerings like mortgages and trading, Accenture says. "Branches remain vital to banks, but they need to be reimagined as one aspect of a radically new approach to consumers," said Mike Goodson, a managing director and head of management consulting for Accenture's North America banking practice. "This is not just an opportunity for banks to recover profitability and reduce costs. It is an opportunity to establish a much more sustainable relationship with customers and better retention of market share into the future."