As new entrants drive up competition in the financial services market and the costs of regulations continue to increase, margins for financial services are experiencing decline. In response to the need for differentiation and competition, fintech firms are offering customers improved value propositions. In this report, NCR Corporation explores  the current and future trends of retail banking in Europe within this turbulent market environment.

With a portfolio of hardware, software, and financial services, NCR Corporation investigates how retail banks are innovating to meet existing challenges in its new report, Retail Banking Future Trends in the European Market. Headquartered just outside of Atlanta, Georgia, but with business operations in over 180 countries, NCR Corporation is a global leader in consumer transaction technologies, and is thus well positioned to explore the following themes:

Simplification and Optimisation of Operating Model , To focus existing resources on value for customers, financial institutions in Europe should make streamlining of business processes a priority. This requires improvements to sales and services outcomes within the operating model through areas such as distribution channels, process, and technology simplification. While most retail banking executives still feel that the branch is a strong asset in the value chain, footfall traffic is in steady decline. These changes demand an effective channel mix to be capable of achieving an optimised customer experience.

Focus on Enhancing Customer Experience , As a top priority for retail banks, enhancing the customer experience is about understanding needs within the context of relationship management rather than transaction management. This includes the right sales and service capabilities with awareness about the different levels of maturity amongst customers (e.g. millennials).

Digitalisation of the Business , NCR has attributed the digitalisation of business as a key transformational trend across the globe; however, a lack of strategic vision and existing organisational silos serve as barriers for banks in this arena. While digitalisation is focused on automation and operational improvements, there is significant potential for agility and flexibility across the retail banking experience.

Digitalisation at Scale , NCR goes on to deem this as one of the greatest influencers of future retail banking. Digitalisation at scale goes requires more than just a digital project, it must become embedded within the core capabilities of organisations while also offering a clear view of customers at the centre.

Customer Centric Business Model , The concept of Consumer Centric Business Models requires a shift in mind-set towards more open, agile, and transparent business models. Here, the idea is to connect with customers at personal and emotional levels in order to truly deliver value to them. 

Personalisation , Building on the previous point, NCR sees personalisation of product and service as part of the Consumer Centric Business Model. The report cites leading management consultancy firm, McKinsey, in its assertion that, “personalisation can reduce acquisition costs by as much as 50 percent…and increase efficiency of marketing spend by 10 to 30 percent.”

Staying ahead of the game

Among other areas, NCR identifies the following factors as most important to the future of business and technology innovation in European retail banking: big data analytics, advanced Artificial Intelligence (AI) capabilities, and a re-defining of the payments landscape. That being said, to truly stay ahead of the game, retail banks will need to re-think their distribution models.

NCR points out that rising operating and regulatory costs, eroding sales results, demand on channel convergence and growth in mobile channels, are just a few of the factors causing the demand for improved distribution models. Moreover, the report stresses that such models should offer options designed to achieve seamless digital integration between interfaces, optimise physical assets (e.g. ATMs and online channels), transform staff, and that can ultimately enhance each channel as a responsive touch point.

As European banking sectors faces new challenges, out of the box thinking must be matched by the ability to streamline business operations. Beyond the need for institutions to embrace the digital as a way of life is the need to to develop new leadership styles that can respond to the new changing financial ecosystem around customers today.

For access to the full report (PDF) – Retail Banking Future Trends in the European Market – by NCR Corporation, click here.