Traditional banks at risk of losing customers to Bigtech, challenger banks

With their highly customer-centric  offerings, BigTechs and “challenger banks” are making inroads into Gen Y and tech-savvy segments. Customers prefer financial products from BigTechs slightly more than those from “challenger banks”; three-fourths of the tech-savvy already use at least one financial product from a BigTech firm.

According to the Capgemini World Retail Banking Report (2019), in the near-term, retail banks will be the most vulnerable to losing last-mile customer mindshare to non-traditional players in payments, cards, and core banking accounts. More than 60 per cent of customers say they already use these products from BigTechs or “challenger banks” or are likely to do so in the next three years.

And then, you have “open banking”, a practice that provides third-party financial service providers access to consumer banking, transaction, and other financial data from banks and non-banks alike. The report says that effectively capitalising on “open banking” can help banks address the existing gap in providing customers a seamless and integrated experience. Presently, less than a third of customers believe their bank offers a variety of useful financial apps, or timely and relevant product recommendations.