Retail banks must embrace data-centric capabilities to see off fintech challenge - report

Retail banks must embrace data-centric capabilities to see off fintech challenge - report

As fintech upstarts snap at their heels, retail bank executives are concerned that they are lagging in their ability to offer true omnichannel and personalised experiences, according to a report from Capgemini and Efma.

For their latest World Retail Banking Report, the partners surveyed more than 8000 consumes and 142 banking executives to gather insights from 29 countries around the world.

The results show that three quarters of customers are attracted to fintechs as they offer fast, easy-to-use products and experiences that are readily available while remaining low in cost. On the other hand, nearly half of respondents say their current banking relationships are neither rewarding nor emotionally connected, with 52% saying banking is not “fun.”

Capgemini argues that to keep pace with their new rivals, retail banks will need to rethink their business models and focus on driving greater customer engagement. However, this will require work, with 70% of banking executives concerned they lack sufficient data analysis capabilities.

Many banks are looking to keep pace with fintechs by meshing traditional offerings with nonfinancial lifestyle products, while others are offering Banking as a Service and embedded banking solutions via the ecosystems of non-financial third parties.

However, this comes with risks: 78% of respondents worry about cannibalising products through ecosystem partners, and 72% are concerned about preventing brand dilution.

Nilesh Vaidya, global industry head, retail banking and wealth management, Capgemini Financial Services, says: "The formula for growth sounds simple. Customers want to be provided with personalized experiences, regardless of wherever they may be on their own digital journey. The challenge, however, remains in execution.

“Retail banks must rethink their wider business models, restructuring to focus on providing the same personalized, 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.”

Read the report:
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