.As they mature, digital startups are now turning their attention from customer acquisition to becoming profitable. With no branch networks and legacy IT systems, digital challengers have a substantially lower cost-to-serve than incumbents of £20-£50 per account compared to £170. Meanwhile, deposit balances for challengers have increased from £70 to £350 per customer. However, this is still dwarfed by the £9000 average for incumbents.However, the majority of new entrants are still not profitable, with the average digital bank losing £9 per customer
Out of a $1.5bn pool for 2019.
The deals align with “The New” — an Accenture strategy that pushes the company deeper into digital, cloud and security services.
The Register closes out it’s reporting on the rumor that Oracle was considering buying Accenture:
…spokeswoman Deborah Hillinger has since denied that an acquisition will take place, claiming: “The Accenture rumour is completely untrue. Never even considered it.”
Meanwhile, Dennis covers the many reasons why the deal wouldn’t make sense in the first place. The margin argument is always a good, quick one:
…consultants are not normally selling software solutions, but are selling the bodies and expertise needed to make the chosen solution work, the second part of this model. When you look at how that translates into revenue and profit, it quickly becomes apparent that while the implementation contract may well be 5, 6 or even 10x the software cost, the margins are much smaller per dollar spent by customers. To give you a flavor of what this means, in its latest filing, Accenture recorded operating income of 13.7%. For its part, Oracle reported operating income of 32%. As you can readily see, there is no comparison between the two companies, despite the fact Accenture has been acquiring and developing its own software for solutions outside the ‘mainstream’ of solutions that Oracle sells.
We discussed this rumor on last week’s Software Defined Talk episode as well.