Oliver Wyman Sees Up To $400 Billion Opportunity In Banking for Non-bank Major Brands
March 16, 2022
The study, entitled “Would You Like Better Banking with That Latte?” estimates that brands establishing consumer banking services on top of their existing businesses can tap into a market worth up to $400 billion in annual revenue.
“This opportunity is arising from a confluence of several market factors,” said Dan Rosenbaum, Partner at Oliver Wyman and one of the co-authors of the study. “Consumers and small businesses are engaging and transacting through digital channels at an accelerating rate. A new generation of banks are willing to extend their banking licenses, operations, and IT infrastructure for a service fee to non-banks – a business called “Banking-as-a-Service.” And fintech has advanced to enable non-banks to embed banking services, like payments, card services and lending, directly into their customers’ non-banking journeys.”
Some major corporations are already taking advantage of these opportunities – in the past few years, a major telecommunications company launched a no-fee, interest-bearing, mobile first checking account, and a national tax preparation company has created a mobile banking platform that offers consumers spending and savings accounts. Unlike conventional banking partnerships, these “Banking as a Service” ventures feature the non-bank company front and center, meaning that they have exclusive access to their customers.
How Banking as a Service benefits Non-Banks
- It creates a personalized banking experience for their unique customer base versus the broader offerings of traditional banks to differentiate from competitors and accelerate new customer acquisition.
- In some cases, it can transform traditional costs, like merchant swipe fees, into sources of revenue.
- Banking is a compelling way to retain customers. When non-banks use banking to create unique value propositions for their customers, it creates an incentive to stay with the brand.
- Financial transaction data can capture new insights into customer preferences and behaviors.
“The non-bank industries in which banking is underway – and most likely to take hold – are those that most rely on customer loyalty and active engagement with the brand,” said Chaitra Chandrasekhar, Partner and co-author of the study. “Examples include grocers, digital marketplaces, app software, tax preparers, mobile phone carriers, and entertainment platforms. These and other industries mentioned in our report fall within the sweet spot of high customer loyalty and high engagement. Several major brands have launched, or are planning to launch, banking services, like deposit accounts, for their customers.”
Three Ways Non-Banks Attract Banking Customers
For those businesses considering a bank services play, the study recommends following a few steps in thinking through their expansion:
- Identify how your service can fulfill an unmet customer need;
- Craft a value proposition strong enough to pull customers away from their existing banking relationships;
- Determine internal capacity for banking services; and establish partnerships that enable successful execution.
About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With offices in more than 70 cities across 30 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm has more than 5,000 professionals around the world who work with clients to optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a business of Marsh McLennan [NYSE: MMC]. For more information, visit www.oliverwyman.com. Follow Oliver Wyman on Twitter @OliverWyman.
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