Capgemini and Efma today released the 2016 World Retail Banking Report (WRBR). The comprehensive survey data in this report, gathered from polls of 16,000 customers in 32 countries, as well as over 140 industry executives around the world, is designed to assist banks in understanding the current competitive landscape and mapping out their strategic responses. The information in this report will help banks to:
- Assess current levels of customer experience
- Determine the impact of improved customer experience
- Gauge the true influence of fintech competitors
- Take stock of their ability to manage the fintech threat
- Get up to speed on the most effective responses to fintech’s advance
According to the report, FinTech providers are making increasingly significant inroads with customers, yet the vast majority of banks admit they are not adequately prepared to manage this emerging FinTech threat. The report also found that nearly two-thirds of customers (63 percent) are now using FinTech products or services, and are much more likely to refer friends and family to their FinTech provider (55 percent) than to their bank (38 percent). However, while 96 percent of banking executives agree that the industry is evolving toward a digital banking ecosystem, where Fintech providers play a much bigger role, only 13 percent say they have the systems in place to support it. Retail banks have been eyeing the steady advance of fintech competitors for some time now. With fintech’s momentum gaining, there is greater need than ever before for banks to develop an action plan that ensures them a central role in an increasingly digital and interconnected world.
With penetration highest in the emerging markets and among younger customers, Fintech service providers are gaining popularity among consumers thanks to the perception that they are easy to use (82 percent), offer fast service (81 percent), and provide a good user experience (80 percent). Banks, however, underestimate the value placed on these services with only 36 percent agreeing that FinTechs offer fast service (a 45 percentage point gap) and only 40 percent agreeing that Fintechs provide a good experience (a 40 percentage point gap).
Customer Experience Rises, but Not Enough to Greatly Improve Profitable Customer Behavior
- Retail banks improved their position on Capgemini’s Customer Experience Index by 2.9 points, registering advances across broad portions of the globe and through every channel. Banks in more than 85% of countries improved customer experience, with gains being highest in Central and Western Europe.
- Younger customers registered lower levels of customer experience, raising concerns about the ability of banks to meet the higher expectations of this important segment. In nearly every region, Gen Y customers scored lower on the CEI than Gen X.
- customers, who in turn scored lower than other age groups.
- Despite the overall rise in CEI, profitable customer behavior improved only marginally, and was especially low in terms of additional purchases, pointing to the need for banks to continue to improve the customer experience, especially through more innovative product development.
Fintech Firms Gain Prominence
- Nearly two-thirds of customers globally said they are using products or services from fintech firms, giving weight to the threat that banks may become disintermediated from their customers.
- While customers have more complete trust in their banks, fintech firms are making gains; 87.9% or more of customers across all regions somewhat or completely trust their fintech providers.
- Fintech firms are making positive impressions, causing customers to be much more likely to refer their fintech provider (54.9%) compared to their bank (38.4%).
- Less than one-quarter of banks said they have an advantage over fintech firms in their ability to innovate or move nimbly.
Fintech Partnerships Will Define the Future of Banking
- The vast majority of banks (87.1%) believe their infrastructures are not adequate to support the digital banking ecosystem of the future, giving momentum to the increasingly aggressive competition from fintech firms.
- Nearly two-thirds of banks view partnerships as the most effective way of responding to the growing fintech threat.
- To get the most from their fintech partnerships, banks will need to embrace APIs and begin laying the groundwork to revamp their core systems.
- Banks will need to navigate the transition to fintech partnerships and API-based software development with care, to ensure they remain relevant in the evolving digital banking ecosystem and integral to customer relationships.
The full report along with an infographic is attached for your reference. For more information, please visit: https://www.capgemini.com/news/banks-struggle-to-keep-pace-with-fintech-disruption-finds-world-retail-banking-report-2016 and www.efma.com/WRBR2016
@drnatalie petouhoff, VP and Principal Analyst, Constellation Research
Covering Customer Experience and