The Future of Retail Banking
Morningstar's Dan Werner and Jim Sinegal see a move toward digital and direct channels.
Banks are moving toward more digital and mobile-based platforms to better address the needs of millennials, while re-evaluating the importance of their branch footprint. The best-positioned bank to benefit from these changes, in our view, is PNC Financial Services Group (PNC), because of its aggressive digital bank strategy, which envisions two thirds of its branches being transformed into more digital and millennial-friendly branches by 2018.
We see two firms under our coverage-- Discover Financial Services (DFS) and Charles Schwab (SCHW)--as the primary beneficiaries of changing consumer preferences. These two companies are leaders in online banking, with almost no legacy cost burden associated with extensive branch networks. Online firms have historically paid higher rates to gather deposits, but this disadvantage is fading along with the need to visit physical locations to obtain cash and deposit checks. If that weren't enough, these firms are clearly providing a superior customer experience without the benefit of face-to-face interaction. We expect virtual banks to use these advantages to gain profitable deposit and loan market share in the years to come.
Dan Werner does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.