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Banks must transform towards digital ecosystem

About Retail Banking

Capegemini and Efma have released the World Retail Banking Report for 2016 which evaluated the retail banking customers attitude towards their financial service providers. The survey data consists of polls from 16000 customers in 32 countries as well as over 140 industry executives around the world. The report found that global banks must start to ‘think big’ to meet the evolving customer demands in the digital age, revamping core systems and establishing full competency in API-based software development.

CEI score

Globally, banks have improved their Customer Experience Index (CEI) by 2.9 points. More than 85% countries witnessed an increase in their CEI scores with largest gains occurring in Japan, Netherlands and Sweden. However, the profitable customer behaviour has improved marginally and was especially low in terms of additional purchases.

Around 16% customers said that they are likely to purchase another product from the bank which points to the need of more innovative product development.

As per the report, 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). Customers using fintech services also place a high amount of trust in them and hence banks needs to be more proactive in dismantling the organizational and technological barriers that are preventing them from competing more effectively against fintechs.

Banks & fintechs

The report also includes the fact that banks are struggling to respond to increasingly aggressive fintech competitors. As per the survey, 96 percent of banking executives agree that the industry is evolving toward a digital banking ecosystem and only 13 percent say they have the systems in place to support it.

Capgemini’s Head of Global Banking and Financial Services, Anirban Bose stated that “the inability of banks to innovate leaves the door wide open for fintech providers to attract new customers. There is opportunity for banks to begin working collaboratively with these companies, but they must formulate a rapid response plan to do so before the swiftly evolving bank environment outpaces their window for change.”

Efma’s Secretary General Vincent Bastid stated that “By partnering with these companies, banks can gain much needed guidance in product development, as well as a stronger voice in defining a central role for themselves in the current banking environment.”

According to the report, banks and fintechs have strengths that are complementary and which should be leveraged to create a stronger central financial experience for customers. While fintechs excel in agility, innovation and exploiting new technology, banks offer capital, deep customer bases and expertise in working with regulators.

For more resources, visit the Holland FinTech dedicated insights page here. Download the full report below.

World Retail Banking Report for 2016
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