BY Fraser Tennant
The advent of the coronavirus (COVID-19) pandemic has shifted consumer demand for electronic banking, with over half of European customers willing to purchase products digitally, according to new analysis by Kearney.
In its ‘European Retail Banking Radar 2021: Challenges and opportunities in a tumultuous year’, Kearney reveals that customers who were willing to purchase banking products digitally had increased to 50 percent from 33 percent in 2020. Conversely, those who said they would still visit their branch or seek advice from a contact centre dropped to 41 percent from 53 percent last year.
Regionally, Sweden performed best in terms of highest adoption of digital channels, with 61 percent of customers saying they were willing to buy banking products online in 2021. Second was the UK, rising from 48 percent in 2020 to 58 percent this year.
“Retail banks will need to acknowledge that banking has changed – we have moved from total digitalisation and open banking being whispers about the near future to it swiftly becoming our present,” said Simon Kent, partner and global head of financial services at Kearney. “Customers are no longer loyal to high street bank branches, and retail banks will suffer if they do not evolve in line with this change in preferences.”
And while the pandemic has transformed behaviours across all markets, it particularly catalysed change in the ones that had been lagging. For example, in February 2020, only 24 percent of Germans would buy a new banking product online. By March 2021, this figure had almost doubled, with 47 percent stating a willingness to do so.
“Consumers’ demand for an online experience is not limited to simple products like current accounts – there is demand for complex products such as mortgage applications to be completed online,” continued Mr Kent. “To economise, improve profitability and remain competitive, banks must adopt even more digital and data-led practices.”
Furthermore, across all surveyed countries, disintermediation is growing. According to Kearney’s analysis, between 12 and 18 percent of customers research their next financial product through price comparison websites rather than a bank website or financial adviser. In the UK in particular, 16 percent use price comparison portals for consumer loans, a trend that is likely to grow over the next few years.
Mr Kent concluded: “Transformation is no easy feat, but the business environment of today is unrelenting.”
Report: European Retail Banking Radar 2021: Challenges and opportunities in a tumultuous year