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2: Newcomers: The Unknown Game Changers

2.1 Introduction

The aforementioned developments are the guide rails for the future-oriented (re-) design of banks' business models. A serious analysis of the consequences can be conducted only specifically to each institute. Yet it is important to realise that time is running out. The reason for this is that a constantly growing number of customers is becoming ever more refractory are willing to switch.

The internet and the digitalisation make it easier for newcomers to the sector to enter the market. They offer innovative products with faster development cycles (time-to-market), as well as greater user-friendliness at lower costs. It is astonishing that even start-ups are considered by conventional bank customers to be sufficiently reliable to be entrusted with their financial means or data. Furthermore, until now digital competitors have had the advantage that they can offer products or services that are not yet subject to any comprehensive state regulation. Above all, however, there are already providers whose business models deliberately exploit the thought traps of the banks, allowing them to acquire step by step those dissatisfied customers who are willing to switch. It is a fact that many new providers have emerged in the banking sector in the last 10 years—even if they do not (yet) dominate the market. Banks are busy trying to meet regulatory requirements, push through cost reductions and optimise processes. The danger here is that customer needs do not form the primary focus of the objectives.[1] The newcomers use these failings of the classic providers in order to position themselves as complete providers or implant themselves in a niche area of the banks' value chain (Insideparadeplatz 2013). One of the main objects of every classic competitor analysis is the identification of the success patterns of both the traditional and the innovative competition. The main objective of this chapter, therefore, is to take an impartial look at the business models of these new digital competitors in order to detect the key elements of their unique selling propositions (USP), and thus to lay the second important foundation for the analysis of the possible need for change on the part of conventional banks. The digital competitors can be divided into two clusters: companies that already possess a banking license, and companies without a banking license, but which are starting to offer one or more of the economic functions of banks.

  • [1] A study by the Schweizerische Institut fu¨r Finanzausbildung (SIF) shows that, according to information provided by Swiss bank employees, around 40 % of banks survey future customer needs less than once a year; when designing/implementing the product range, one third of the respondents believed that customer needs did not form the main focus, but instead other aspects (Auge-Dickhut et al. 2012).
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