NEW YORK (Reuters) - Financial technology startups and
other new entrants are making inroads in the U.S. banking market, but have yet
to capture a threatening share of bank revenues, according to research
published by Accenture Plc (ACN.N) on Wednesday.
Around 19 percent of financial institutions in the U.S.
are new entrants, such as challenger banks, non-bank payments institutions and
big tech companies, according to the report. Yet they have amassed only 3.5
percent of the total $1.04 trillion in banking and payment revenues so-far,
Accenture found.
In the UK, new entrants have made a larger dent, having
captured 14 percent of the total €206 billion ($238.45 billion)in industry
revenues, with the majority going to non-bank payments companies, according to
the report.
Accenture assessed more than 20,000 banking and payments
institutions across seven markets around the world to determine the level of
change that digital technologies have brought about in banking.
Since the financial downturn, a growing number of
companies across the world have sought to position themselves as cheaper and
more user-friendly alternatives to banks by making better use of new
technology.
Banking and payments institutions have decreased by
nearly 20 percent from 2005 to 2017. Still, one in six current institutions is
what Accenture considers a new entrant, or companies that have entered the
market since 2005.
Their impact has varied by geography.
Tougher regulations and greater dominance of large banks
have made the U.S. a more difficult market for new entrants in areas excluding
payments, Alan McIntyre, head of Accenture’s global banking practice, said in
an interview.
“You still have a very robust banking market in the US,”
McIntyre said.
More than half of new current accounts opened in the
United States have been captured by three large banks, which have had more
money to invest in digital than smaller regional players, he added.
In the UK the situation has been different, thanks in
part to a push from regulators aimed at fostering greater competition in the
financial sector and diminishing the dominance of large banks.
New entrants account for 63 percent of financial players
in the UK, according to the report.
The report also found new entrants are taking over one
third of new revenue, pointing to their potential to pose a greater competitive
threat going forward.
In Europe, including the UK, 20 percent of banking and
payments institutions are new entrants and have captured nearly 7 percent of
total banking revenues, according to the report.
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