Global Retail Banking Report 2022: Incumbent Banks Must Embrace Data-Centric Capabilities to Deliver Personalized Customer Experiences
PARIS–(BUSINESS WIRE)–According to the World Retail Banking Report 2022 (WRBR) released today by Capgemini and Efma, retail banks are currently lagging behind in their ability to deliver true omnichannel experiences as customers turn to competitors who offer more personalized experiences. 75% of customers surveyed are attracted to cost-effective and transparent FinTech services, significantly raising their expectations of digital banking. However, traditional banks are struggling to deliver on their promises, with 70% of bank executives worried about not having enough data analytics capabilities. Therefore, with customers now able to switch providers at the touch of a screen, it is essential that banks better leverage data and artificial intelligence (AI) to personalize the experience, create stronger connections and maximize customer value.
The recent rise of FinTechs within the industry has caused a paradigm shift in what consumers now expect from their banking experience, challenging the revenue and relevance of many traditional providers. In the report’s “Voice of the Customer” survey, approximately 75% of respondents said they are attracted to these new agile competitors because they offer fast, easy-to-use products and experiences that are readily available while remaining inexpensive. . On the other hand, nearly half of respondents said their current banking relationships were neither rewarding (49%) nor emotionally connected (48%). 52% said banking was not “fun”. To keep pace with these competitors, retail banks will need to rethink their business models and focus on driving customer engagement.
Customers want rewarding and engaging experiences that are simple and accessible
With improved data governance models, banks can collect proprietary customer information to improve the competitiveness of their digital marketing capabilities. Combining this with AI and machine learning (ML) will unlock new possibilities for identifying, retaining and engaging customers with real-time experiences. However, many of these benefits are lost to traditional banks that currently lack the capabilities to handle the sheer volume of customer data. In the report’s survey of executives, 95% of top global banking executives said outdated legacy systems and core banking platforms hinder data optimization efforts and customer-centric growth strategies , while 70% said they lacked the resources to process and analyze the data.
“The formula for growth seems simple. Customers want personalized experiences wherever they are in their own digital journey. The challenge, however, remains in the execution,” said Nilesh Vaidya, Global Industry Head, Retail Banking and Wealth Management, Financial Services Strategic Business Unit at Capgemini. “Retail banks need to rethink their broader business models, restructure to focus on providing the same personalized, lifestyle-appropriate ecosystem journeys that customers expect from their digital interactions. Without addressing the stark disparity and inconsistency between a customer’s digital and physical banking experiences, traditional banks risk losing customer value to their more nimble FinTech counterparts.
Banks must take advantage of platform-based models to optimize their growth
According to the survey, more than 70% of bank executives indicated that traditional banks lack data and analytics capabilities. As incumbent banks race to keep pace with agile FinTechs, many vendors are combining traditional offerings with non-financial lifestyle products. Others offer banking as a service (BaaS) and integrated banking solutions through non-financial third party ecosystems. Platform models can help collect data for personalization, making them well positioned to leverage data ecosystems and derive real-time insights from them.
However, while platform-based models are not new to banks, many players still struggle to implement them. In the executive survey, 78% of respondents were concerned about cannibalizing products through ecosystem partners, and 72% were concerned about preventing brand dilution. According to the report, challenges need to be addressed to deliver the personalized, omnichannel experiences and ecosystem journeys that customers want, which will rely on adopting new technologies and breaking down internal silos.
“To thrive in this fiercely competitive environment, as digital native FinTechs continue to capture growing market value, we see retail banks finally adopting innovative technologies and platform-based models to optimize this data-driven growth.” , says John Berry, CEO of Efma. “Although this has evolved in many of these incumbents’ digital channels, customers still expect branches become experience centers, filled with self-service options and financial advice. By building their ability to collect and analyze data, providers can identify what customers want, which ultimately is consistent omnichannel banking experiences. »
Positioning banking CMOs as customer strategists and engagement managers to deliver a true omnichannel experience
To meet the data and technology challenge of strengthening customer relationships and personalizing their banking experiences, chief marketing officers (CMOs) must step up and play a central role in this evolution. According to the survey, 75% of global banking CMOs said they were directly responsible for building the brand (25% said it was a shared responsibility with other C-Suite leaders ), and 63% from new product development and launch, demonstrating how these leaders are expected to take ownership of the customer lifecycle and manage every facet of customer engagement. However, many of these CMOs are ill-equipped to guide the transition from product-centric to customer-centric marketing, the report cites, largely because the data needed to pursue these customer-centric strategies is poor, siloed, and focused. only on internal data, missing external data sources.
For example, only 22% of CMOs said they directly manage end-to-end customer experiences or have access to the comprehensive customer profiles needed to effectively personalize their product or service. However, by engaging with this critical data, CMOs can deliver a true omnichannel experience by anticipating customer needs and creating personalized offers. To achieve this, CMOs will need to take a page from the FinTech book to curate targeted content, improve the banking experience with continuous process improvements, and establish an effective, data-driven value loop that prioritizes commitment and long-term relationships. By doing so, retail banks will be able to create, realize and capture sustainable customer value.
The World Retail Banking Report 2022 draws on information from two main sources: the Global Voice of the Customer 2022 survey with 8,051 respondents, and the Executive 2022 surveys and interviews with 142 banking executives. Together, these top research sources cover information from 29 markets: Australia, Austria, Belgium, Brazil, Canada, China, Egypt, France, Germany, Hong Kong, India, Indonesia, Ireland, Italy, Japan, Kuwait, Luxembourg, Malaysia , Mexico, Netherlands, Norway, Qatar, Singapore, Spain, Sweden, Switzerland, United Arab Emirates, United Kingdom and United States.
For more information, visit www.worldretailbankingreport.com.
Capgemini is a global leader in partnering with businesses to transform and manage their business by harnessing the power of technology. The Group is guided daily by its goal of unleashing human energy through technology for an inclusive and sustainable future. It is a responsible and diverse organization of more than 325,000 team members in more than 50 countries. With 55 years of experience and deep industry expertise, Capgemini is trusted by its clients to meet all of their business needs, from strategy and design to operations, fueled by the changing world fast and innovative cloud, data, AI, connectivity, software, digital engineering and platforms. In 2021, the Group achieved worldwide sales of 18 billion euros.
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A global non-profit organization created in 1971 by banks and insurance companies, Efma facilitates the networking of financial services decision-makers. It provides quality information to help banks and insurance companies make the right decisions to foster innovation and drive their transformation. More than 120 financial groups in more than 130 countries are members of Efma. Headquarters in Paris. Offices in London, Brussels, Andorra, Milan, Bratislava, Istanbul, Dubai, Tokyo, Kuala Lumpur and Seoul.
Find out more: www.efma.com