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The Rise of the Digital Customer

In this White Paper, IDC Financial Insights discusses how new technologies and devices are fundamentally changing the expectations and behavior of the modern consumer and triggering the rise of new segments, such as the digital-only customer.

Customers in these new segments do not want a face-to-face relationship with their bank, but expect a seamless, interactive, and consistent interaction with a bank through remote channels. New strategies, such as omnichannel, mobile optimized, or data-driven decisioning have emerged, but their implementation requires more than just the latest technology or a lean process; they call for a genuine cultural change within the bank. While today's technology can enable digitization, financial institutions have to prioritize the development of their digital strategy and pay more attention to today's and tomorrow's customer needs to stay relevant amid the increasing competition.

Key findings:

  • Digitization is not only transforming the interaction with the customer and the customer experience, but it has also triggered the rise of new customer segments, such as the "digital-only" customer.
  • Digital is now and for everyone. The use of digital financial services is not a generational phenomenon but has been widely adopted across all customer segments.
  • The 25- to 35-year-old segment is the most digitally active. Not only is the number of channels increasing, but so is the frequency of interaction with a bank.
  • Leading banks are responding with a combination of three strategies: the omnichannel strategy, the big data analytics strategy, and the mobile optimized strategy.
  • Given the internal and external competitive pressures, IDC expects the industry to move towards a lifestyle banking model, moving from providing products towards delivering services, such as advisory, facilitation, and aggregation.

 

Situation Overview

Asian consumers have been on the forefront of the digital revolution, particularly with the advent of the smartphone. While the smartphone has become omnipresent in many aspects of daily life, it still has only marginally made its way into the financial services industry.

Nonetheless, digitization has given rise to new banking customer segments. The digital-only customer for instance is defined as customers that have not interacted with branch personnel in the last six months. IDC Financial Insights estimates that North America leads the way with 7.2% of banking customers falling into this category, while digital-only customers account for about 4.5% in the Asia/Pacific region in 2015. IDC Financial Insights expects this segment to grow to about 15% of banking customers by 2020 — thanks to greater usage of sophisticated mobile devices, improved Internet bandwidth, and better application quality...

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