The Competitive World of Retail Banking

In a report released by CapGemini examining the world retail banking industry, the demand for a more competitive pricing structure for retail as well as internet transactions revealed a new trend: a decrease in the cost per transaction.

March 15, 2006, CapGemini, ING, and the European Financial Management and Marketing Association (EFMA) presented their findings in a report that covered 142 banks in 20 countries and for the first time, included Ireland.

In a study released as a feature of the annual report, the retail banking industry are seriously examining the internet and other remote channels for the most promising expansion and growth. Many of the leading banks expect to make one-third of their sales outside their traditional branch operations by 2010.

This year's report divided customers into three broad categories according to usage patterns and reflected the tremendous variations between each. The three categories were divided by less-active, active, and very active.

The measure of prices paid by user examined the one-size fits-all approach of the Euro zone versus the more tailored markets of the US, UK, and Asia Pacific. In these markets, the most apparent decline in pricing resulted from decreased online expense of internet users. The sharpest cut occurred in the Euro zone at -28%, followed by the US with -27%.

This in-depth 2006 study provided a more detailed view of the prices of basic banking services and demonstrates that the conditions are excellent for pairing the pricing of services with customer flexibility, automation, and remote channel access. This finding offers banker an insight into the new customer relationship model that seems to be emerging, and forces many in the banking sector to re-examine their service offerings as well as their channels of operation.