An industry in change
When the economy shifts from a traditional banking structure to a digital, decentralized structure, what will happen to the banks?
In the report Banking Global Annual Review 2019 from the consulting firm McKinsey, which was written before the Corona crisis, describes how the global lending rate has slowed and not followed GDP growth.
The banking sector is often described as an industry in crisis with consumer credit, mortgages, lending to SMEs, mass payments and competitive asset management. In addition, financial advice will increasingly be handled by robots powered by algorithms and we will see a world where new financial data analyzes will be launched on the market.
Profitability in the Swedish banking sector is high in comparison with the European banks, but their earnings largely consist of net interest income and net commissions. The historically low interest rates mean that the banks will eventually be forced to raise their fees.
How many visitors do the Swedish banks have each month?
The traffic to the banks varies greatly between the Swedish banks. In Sweden, we have four major banks, but on the list of number of visitors, it can be seen that Avanza has the second most visitors and has taken an increasing digital market share over the past year.
Swedbank has the most unique visitors, followed by Avanza.
Avanza's organic development has increased by 11% during the Corona crisis, while the other banks' organic visibility has been more constant.
Picture the organic development from March 2020 to March 2021. Avanza also spends more on advertising and the number of paid keywords compared to competitors.
Users' behavior on banking sites
The traffic to the websites
It is clear to see that the direct traffic to Avanza is significantly greater, which indicates that they have a strong brand, ie the users do not do a Google search on Avanza but they visit the site directly.
It is also possible to see from which sources you visited before you visited the banks and where you go next. Direct traffic accounts for a very large proportion of visitors and it varies between the sites where you go next.
The digital channel organic search, ie using Google before visiting the site, works more efficiently for Avanza. If you compare the visibility index, it is much larger at Avanza than the traditional commercial banks. In total, Avanza appears in the search results of 80,810 keywords.
Searches for banks' company names on Google
In Google, we searched the brand searches for banks' company names over the past 12 months. With this survey, Swedbank is the bank that most people apply to, but during this year, 18% fewer searches were made on the term Swedbank. In second place is Nordea, where the decline is even greater and with a 33% decline. Avanza shares second place with Nordea.
|Keywords||Average search volume||Search volume February 2021||Trend|
|Swedbank||1 830 000||1 500 000||-18|
|Nordea||1 000 000||823 000||-33|
|Advance||673 000||823 000||0|
|Commercial banks||673 000||673 000||0|
|SEB||450 000||450 000||0|
The competition from Fintech companies
The Internet has fundamentally changed the banks' customer meetings and before the IT boom, customers were often forced to visit the offices physically to carry out their banking business.
Customers' needs and behaviors have changed radically in the new cashless society where it has become increasingly common for customers to manage their finances online.
The new financial technology companies are a global phenomenon. Digitization can change entire industries, not least in the banking sector where technological innovation is a driving force for change in both technology and digital marketing. The established banks have at the same time been employed with a legacy with older systems at the same time as the industry has received new regulations and regulations.
Several of the new fast-moving Fintech companies are innovative and they are relatively new to the market and they have with varying success niched themselves in completely new business areas.
The innovative companies have the greatest impact where they can use a technical platform that supports the business model in an effective way and they are characterized by easy-to-use services where it is possible to achieve a high conversion rate.
- Mass payments - The market for international digital payments is growing and we are seeing new payment solutions via mobile and digital through Apple Pay, Paypal, AliPay. In Sweden we also have Izettle and of course Swish.
- Blockchains and cryptocurrencies - Bitcoin is the most well-known digital cryptocurrency, but there are many more uses for the new blockchain technology.
- Digital Wallets - is used, among other things, to buy bitcoin.
- Digital currencies
- Direct payments and online payments and decentralized payment systems such as peer-to-peer transfers. Examples of companies Klarna, AliPay, Google Wallet, Payex
- Consumer loans and peer-to-peer loans from players such as Advisa, Lendo and Lendlink.
- Digital loans: lending to small and medium-sized enterprises SME market as well as crowdfunding and digital marketplaces such as Toborrow
- Wealth management and private banking can change through social media and automation examples of companies are Nutmeg, OurCrowd
- Invoicing services as Fakturino (Bonniers) and Fakturabörsen (Schibstedt)
- Fund company
- Daytrading platforms
In addition to the above banking services, new fintech services will be developed in various areas such as debt collection operations, insurance and stock trading, which are excellent for automating and developing online.
We believe that the price of bitcoin and digital assets will only continue to increase as inflation affects other asset classes. More and more banks and investors want to put some of their assets in digital assets and Bitcoin has become a safe haven instead of the traditional gold. The threat is that central banks jointly regulate the crypto markets with legislation - but that threat decreases as more people invest in Bitcoin and blockchain technology.
How can banks compete effectively against fast-moving Fintech companies?
The big challenge for the banks will be to respond to the increased competition while at the same time wishing to retain their customer base. If customers receive better service with another player, it is very likely that they will change service.
Those who work with digital innovation must convince business managers and not least management. Then they must be technically able to implement the new ideas in an extremely technical environment that is enormously complicated with legacy, ie old systems that also contain several levels of security layers.
The competitors, who are entrepreneurs, use the latest technology with simple and fast tools where they do not have to take into account existing technology and office policy. In a startup, there are few decision-makers and they work agile. The decision-making process is not complicated and they run, which means that they can be significantly faster and more agile than the established players who need to be recast from scratch.
The importance of a digital strategy for banks
The difficulty with the old banks is that they have a legacy with old IT systems. A digital strategy means that banks must change processes, commitments, digital competence in the boardroom and management and adopt new business models through digital competition monitoring. It needs to exchange skills with specialist competence.
It is inevitable that more and more banking services will eventually be digitized.
The new services that succeed in the market will be user-friendly, extremely search engine optimized and adapted for digital marketing with different types of digital advertising.
Banks must set up parallel strategies for new business.
While they need to improve and strengthen their current sites, we believe they need to set up parallel strategies. It is easier for banks to initially set up small units or tribes who are commissioned to work freely in each segment where they face digital competition.
Every such device needs a handful of web developers, a web analyst, a digital marketer who knows SEO and Google Ads as well as a business manager.
Lecture on the digitalisation of banks
We gave a lecture at Finansförbundet in September 2016 about new technologies such as PS2 and blockchain (bitcoin) and search engine optimization at the big banks.