Capgemini and Efma’s 2022 World Retail Banking Report reveals that 75 percent of customers believe that fintechs are offering more personalised and seamless experiences than traditional banks.
The report also reveals that 70 percent of traditional banks lack sufficient data and analytics capabilities.
According to the Anirban Bose, financial services strategic business unit CEO and Group executive board member at Capgemini, “Banks have the data to deliver, but often fall short compared to fintech and big tech competitors. They need to invest more in systems, governance and AI/ML technologies to gain insights that can help them create stronger connections and maximise customer value.”
Almost half (49 percent) of respondents indicated that their current banking relationships are unrewarding and emotionally disconnected (48 percent).
“Most banks are burdened by organisational and data silos and aging legacy systems. Many lack the commitment of fintechs to build the analytics and digital capabilities needed to drive customer understanding and fuel personalisation at scale,” the report says.
“At a time when customers can switch banks with a tap of their screens, this gap between what customers expect and what banks can deliver poses a significant threat to long-term relevance and growth.”
More than half (52 percent) of customers believe that banking is not fun, according to the report, and the relationship is not meeting their innovation expectations.
According to Nilesh Vaidya, global industry head, retail banking and wealth management at Capgemini, “Retail banks must rethink their wider business models, restructuring to focus on providing the same personalised, lifestyle-enabled ecosystem journeys that customers have come to expect from their digital interactions.
“Without addressing the disparity and striking inconsistency between a customer’s digital and physical banking experiences, traditional banks risk losing customer value to their more agile fintech counterparts.”
While ecosystem platforms are emerging to meet customer needs and bridge the gap, the authors reveal that banks are struggling with platform innovation.
“In our executive survey, 78 percent worried about cannibalising products through ecosystem partners, while 72 percent struggled with preventing brand dilution. Maintaining ecosystem exclusivity for partners was cited as a challenge by 53 percent of respondents,” the report says.
While fintechs are leading into gamification and data driven experiences that foster customer loyalty and trust-building, many incumbent firms are lagging in the transition.
According to Helene Panzarino, associate director at the London Institute of Banking and Finance’s Centre for Digital Banking, “New entrants attract customers looking for the best price and speed in a transparent transaction.”