As individuals grow digital natives, it appears necessary for banking services to adapt to their customers’ behaviors. New challenger banks then got into the race, compelling traditional banks to accelerate their digitization. Not to mention the consequences triggered by the pandemic which underlined this situation.
The development of new forms of technologies, accompanied by the impact of pandemic, has changed the relationship between individuals and their asset management. Both of these factors have altered payment processes, in the sense that digital transfers are favored over fiat currencies. This means that individuals need banking services that enable them to manage and keep track of their transactions anytime and anywhere. This is the part where challenger banks make an entrance, and defy traditional banks.
Capgemini’s World FinTech report 2021 discloses that “twenty-five percent of global consumers on the lookout for faster delivery, personalized services, and convenience say they would try banking products from new-age players”.
Challenger banks stand out through their full digital capabilities and services. Web-based or app-based banking enables more flexibility in terms of services and hence, presents several advantages. This encompasses, for instance, the instant activation of digital cards in wallets or the personalized customer service. The latter is even more valuable as the bank app dashboard can be customized according to the customer’s priorities and requirements. One of the main missing factors appears to be trust.
Beside, Capgemini’s report highlights that 68% of surveyed individuals “would try a digital-only offering operated by their primary bank”. This proves that traditional banks still have cards to play, and preserve their existing customers’ trust and loyalty. Clearly, traditional banks are well-implemented in society, and are settled in a specific and legal framework. Therefore, legacy and trust appear as their two main advantages compared to challenger banks.
In spite of this, the report concludes that “traditional banks must adopt the best of what a challenger bank offers - in terms of convenience, ease of use, and compatibility across digital platforms - while exploiting their scale and superior resources to the utmost.”. Hence, traditional banks should address these challenges in terms of digitization, so as to compete with challenger banks' full-digital services and - most importantly - meet their existing customers’ demands.
This obvious duality between both systems emphasizes that banking systems are going under an unprecedented transition, and this highlights uncertainties regarding the future of banking. As it happens, Jérémie Rosseli, N26 General Manager, is to tackle this problematic during the ICT Spring event, occurring on June 30th and July 1st. His presentation is dedicated to the topic “What is at stake for the banks today?”, sharing insights based on his own experience and how challenger banks succeed today by reaching a critical size to answer customers’ needs.
Rosseli has extensive experience in international expansion and growth. He has led multiple successful market entries in his previous role with Burger King, with a keen understanding of what it takes to develop brands and accelerate growth through deep market insight.
Publié le 05 mai 2022