Temenos and The Economist Intelligence Unit survey concludes banks must up investment in customer service to remain competitive
46% of respondents believe new competition more likely to come from non-financials
GENEVA, Switzerland – 13 March 2014 – Temenos (SIX: TEMN), the market-leading provider of mission-critical solutions to the financial services industry, today announces the publication of The Economist Intelligence Unit’s (EIU) ‘Future Factors’ report, a comprehensive retail banking survey conducted on behalf of Temenos. The report, finds that retail banks risk losing out to non-financial competitors if they fail to adapt to new customer service digital strategies.
The Economist Intelligence Unit surveyed 242 senior retail banking executives from across the world, as well as conducting 13 one-on-one interviews, to gauge views on how the industry is likely to evolve in the years up to 2020. The report’s scope, the geographical spread of respondents, as well as its focus on both qualitative and quantitative analysis, make it an important barometer of the current state of the retail banking industry.
According to the survey, changing customer behaviour will have the second biggest impact on the industry, after regulation, in coming years. The fear is that customers will defect to new competitors who are seen as coming chiefly from outside of the traditional banking industry, with 46% of respondents citing non-financials such as retailers and telecommunications companies as their biggest threat and a further 22% citing payments providers, such as PayPal.
Another interesting finding is that over 30% of banks consider that new technology will have the biggest impact on retail banking but only a third believe that the industry is ready for this change, with legacy systems and digital channels both cited as areas requiring significant investment.
‘Future Factors’ is part of Temenos’ ongoing commitment to undertaking in-depth research to understand trends in the banking industry and anticipate customers’ needs. The report complements other recently conducted Temenos research, such as a paper produced in conjunction with Deloitte, entitled ”The Financial Services Industry Reaches an Inflexion Point”, sharing the findings from a survey of over 200 senior managers at the annual Temenos Community Forum.
Ben Robinson, Chief Marketing Officer, Temenos, said:
“This EIU report confirms that the confluence of new regulation, new technology and changing customer behaviour is leading to a massive structural change in the retail banking industry. To respond to and capitalise on this change, especially in the face of growing competition, banks will need to make their operations much more efficient at the same time as investing in the capabilities to enhance customer service, particularly across digital channels. If banks are to successfully monetise digital channels, key will be the ability to use analytical insights to tailor products to individual needs as well as leveraging transactional data to help customers make better purchasing decisions. One of the surprising findings from the report is that, while retail banks recognise the need to invest in digital channels, the most commonly cited goal for these investments is to acquire new customers, rather to upsell or cross-sell to existing customers.
Another counterintuitive finding is that more retail banks are increasing, rather than reducing, the size of their branch network. This suggests that, notwithstanding the importance of digital channels, few retail bankers think the branch is dead, but instead has a critical role to play within a multichannel strategy."