A new study conducted by Accenture, a leading global consultancy firm, found that tech giants like Google, Facebook, Apple and Amazon would make great profits out of a banking business, if they entered the commercial finance sector.
As tech and retail giants are diversifying into several industries, the day isn't far when one of the bigwigs would get into retail banking. But will they do well? Apparently yes!
The study found that the younger generation would prefer conducting banking operations like borrow mortgage loans or save and invest their money with these popular tech and retail firms - in branchless form.
For the study, Accenture surveyed about 4,000 retail bank customers in the U.S. and Canada and found that about 39 percent of people in the age group of 18- 34 years would readily switch to the branchless form of banking with firms like Google, Amazon and Apple. Only 29 percent of those in the age group of 35-55 years and 16 percent of the people above 55 years were open to the prospect.
The research also established which company people would prefer. Check the ranking below:
1. Google - 40 percent of the youngsters would like to bank with the search engine giant.
2. Amazon - 37 percent chose the e-commerce website as their favorite branchless banking option.
3. Apple - 34 percent of the young generation said they would prefer carrying out banking operations with the iPhone manufacturer.
The study also revealed that a whopping 72 percent of the young generation would be more likely to conduct banking operations with a telecom, retail, tech or shipping/postal company if they offered banking services.
"Tomorrow's consumer is coming of age with a very different perception of what a bank could be," Wayne Busch, managing director of Accenture's North America Banking practice, said in statement.
"Digital technologies are dissolving the boundaries between industry sectors. For banks, simply being 'more digital' versions of what they are today will not be enough to assure success in the future," explained Juan Pedro Moreno, senior managing director of Accenture's global Banking practice.
"They will need to move beyond their traditional role as enablers of financial transactions and providers of financial products to play a deeper role in the lives of their customers - by applying digital technology in new ways and by offering tangible value and advice based on transaction information."
But, the system of branchless banking comes with its set of disadvantages. RealtyTrac.com cites a recent Gallup study that lists the several barriers threatening consumer privacy in this digital age.
Information leaks, viruses, bot and worms among others pose a great danger to this digital form of banking.
"Recent incidents such as Target's security breach, the Heartbleed bug, and eBay's systems hack have called attention to how much consumers trust the businesses they patronize to keep their personal information safe," the Gallup study states.
"That trust currently appears to be hard to come by. Just 21 percent of Americans have 'a lot of trust' in the businesses or companies they regularly interact with to keep their personal information secure."
The tech and retail diversification has been widespread. Google already has a finance branch through which it supports and invests in startups and other companies. More recently, Google Capital invested in the online real estate bidding platform - Auction.com.
Similarly, Apple recently purchased Dr.Dre's "Beats" Electronics and Amazon is expanding its global footprint.
