The report suggests that as barriers that prevent non-banks from providing “core” banking services continue to drop away, the business models of today’s banks will be challenged. Nonetheless, the report says, banks retain some substantial advantages that counter the current. Trust and brand matter in financial transactions, and some of the resistance to alternative banking providers results from a lack of trust in their security, the report says.

Eventually, according to PwC’s experts, fundamental change is inevitable. The only question is how much of banks’ traditional territory the new entrants will occupy.

Key points from the report:

  • • Banking services will move away from physical, tangible distribution into technology-enabled channels.
  • • As technology advances, it will become easier for customers to move between banks and other service providers.
  • • Brands could become central to banks’ value – those which build a brand which represents trust, integrity, security and quality to customers will be more likely to solve the ‘transaction cost’ of choosing how and with whom to bank.
  • • Banks could become utilities focused on the management of deposits below insured limits and providing a narrow range of domestic credit products.
  • • Regulators and regulation also need to adapt their mindset and approach in order to deal with the changing banking landscape.