| Historical headwinds | Current tailwinds | |
|---|---|---|
| Customer preferences | • Customer dependence upon cash and checks;
and therefore, value of the convenience of the
physical location/infrastructure • Adoption of mobile banking (as primary method of accessing bank) <6% in 2013 | • Increased customer expectations for convenience
and speed driven by experiences with large retail
digital platforms • Increased consumer trust and adoption of electronic payments and a digital experience • Adoption of mobile banking (as primary method of accessing bank) at 34% in 2019; COVID-19 has further accelerated digital adoption |
| Market dynamics | • Relatively higher base interest rates and significant demand for deposit liquidity pushed up the cost of ‘rate-driven’ deposits | • Historically low base interest rates and massive inflow of deposits during COVID has reduced rate paid on digital savings deposits 90% vs. the mid-2000s and 60% vs. the pre-COVID period |
| Regulatory environment | • Challenging regulatory environment — only nine bank charter approvals between 2011-2016 | • Supportive regulatory environment — more than 45 bank charters approved in the last four years (note: may shift back with the change in US administration, but still uncertain) |
| Technology & infrastructure | • Installed software and web browser limited UX • Expensive, legacy banking platforms with limited mobile capabilities • High operating costs, even for digital-only banks | • APIs and open-banking principles • Flexible and modularized core banking platforms combined with cloud computing efficiency and scalability • Proliferation of key FinTech enablers for security, onboarding, etc. • Ubiquity of apps, powerful mobile phones, high speed mobile internet |
