GENEVA, Switzerland–Four-in-five bankers (81%) believe financial institutions will seek to differentiate themselves on consumer experience rather than on their products and services in the next four years.
According to a report by the Economist Intelligence Unit of Temenos, a software provider to financial institutions, the findings underscore the importance of customer/member experience, as changes to consumer banking behavior triggered by the pandemic create long-term structural changes.
Temenos said the report, titled “Demanding More,” is based on a recent global survey of 305 senior banking executives conducted by the Economist Intelligence Unit (EIU).
“The report highlights how financial institutions have been forced to adapt to the sudden movement of customers managing their finances online, which has proved beneficial to digital-only banks,” the company said.
As an example, it noted that as of January 2021, 14 million British citizens (27% of U.K. adults) had a digital-only bank account, representing a 16% growth from January 2020 and an increase of 3X compared to January 2019. Almost three in four (71%) global respondents expect cash to represent less than 5% of all retail transactions globally by 2025, that research found.
Evolution Highlighted
The shift towards online banking has highlighted the evolution of how financial institutions manage relationships and the demise of the traditional branch. Global banking executives’ top strategic priorities are all customer-focused. Improving customer experience and engagement, including personalization and intimacy, was viewed as the top strategic priority by 30%.
“The report further reveals that consumers, particularly Millennials and Gen Z, are increasingly demanding that companies follow responsible business practices,” Temenos said. “This is leading to business engagement with issues that are important to consumers, such as combating climate change and promoting diversity and financial inclusion.”
Other Priorities
In addition, banking executives are prioritizing the financial empowerment of their customers, the company said, noting other findings show one in three financial institutions are considering growing microfinance for entrepreneurs (34%), deposits for unbanked populations (33%) and responsible lending to under-banked populations (32%) in the next one to three years.