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Banks globally need to compete with fintech players to keep pace: Report

Nearly half of respondents said their current banking relationships were neither rewarding (49 per cent) nor emotionally connected (48 per cent), while 52 per cent said banking was not 'fun'

Bank employees shout slogans outside their closed branch during a nationwide strike against the proposed privatisation of the public sector banks, in Kolkata (Photo: PTI)

Bank employees (Photo: PTI)

Press Trust of India New Delhi
Banks globally need to compete with new-age fintech players in providing seamless and cost-effective services and catering to the growing retail banking requirements of customers, a report said on Thursday.

Retail banks are currently lagging in their ability to offer true omni-channel experiences as customers pivot to competitors that offer more personalised experiences, according to the World Retail Banking Report 2022 (WRBR) published by Capgemini and Efma.

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The study covering 8,051 respondents globally revealed that 75 per cent of customers surveyed are attracted to fintech firms' cost-effective and seamless services, which has significantly raised their digital banking expectations.
 
Customers want rewarding and engaging experiences that are easy and approachable, it added.

"However, traditional banks are struggling to deliver with 70 per cent of banking executives concerned they lack sufficient data analysis capabilities. Therefore, with customers now able to switch providers at the tap of a screen, it is critical banks better leverage data and Artificial Intelligence (AI) to tailor the experience, create stronger connections and maximise customer value," the report said.

Incumbent banks must embrace data-centric capabilities to drive personalised customer experiences, said the report, adding that 95 per cent of executives believe their current outdated legacy systems and technological capabilities are unable to fully optimise their data for customer-centric growth strategies.

It said that the recent surge of fintech players has caused a paradigm shift in terms of what consumers expect from their banking experience. It has challenged revenue and relevancy of many traditional banking service providers.

In the report's 'Voice of the Customer' survey, about 75 per cent of respondents said they were attracted to these new agile competitors as they offer fast, easy-to-use products and experiences that are readily available while remaining low in cost.

Nearly half of respondents said their current banking relationships were neither rewarding (49 per cent) nor emotionally connected (48 per cent), while 52 per cent said banking was not 'fun'.

"To keep pace with these rivals, retail banks will need to rethink their business models and focus on driving greater customer engagement," the report said.

The report drew insights from two primary sources -- the Global Voice of the Customer had 8,051 respondents and the Executive surveys and interviews 2022 with 142 banking executives.

"The formula for growth sounds simple. Customers want to be provided with personalised experiences, regardless of wherever they may be on their own digital journey. The challenge, however, remains in execution," said Nilesh Vaidya, Global Industry Head, Retail Banking and Wealth Management, Capgemini's Financial Services Strategic Business Unit.

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, he said.

"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," Vaidya said.

According to WRBR, banks must leverage platform-based models to optimise growth. More than 70 per cent of banking executives cited that traditional banks lack data and analytics capabilities.

As incumbent banks race to keep pace with the nimble fintechs, many providers are meshing traditional offerings with nonfinancial lifestyle products.

While others are offering Banking as a Service (BaaS) and have embedded banking solutions via the ecosystems of non-financial third parties, it said.

In tackling the data- and technology-driven challenge of strengthening customer relations and personalising their banking experiences, chief marketing officers need to step up and play a pivotal role in this evolution, said the report.

The study covered 29 markets, including the US, UK, Australia, Austria, Belgium, Brazil, Canada, China, Egypt, France, Germany, Hong Kong, India, Indonesia, Ireland, Italy, Japan, Kuwait and Luxembourg.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Apr 21 2022 | 11:54 PM IST

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