REPORT
Digital Channels III Internet and financial services in Europe
In collaboration with: CONTENTS
INTRODUCTION 03 | Foreword 04 | Methodology and acknowledgements 05 | Executive summary 06 | The banking and digital landscape remains mixed
FIXED AND MOBILE INTERNET 09 | Fixed and mobile internet: explosive usage growth 09 | Fixed internet banking at the stage of maturity 09 | Mobile internet: increased use among the European panel 12 | Improved customer satisfaction
CUSTOMER JOURNEYS ARE MORE DIGITAL 14 | Customers journeys are more digital, but with an increasingly strong bank presence 14 | Digital channels are used frequently, but for transactions which remain straightforward 15 | A pre-sales process boosted by commercial proactivity 17 | Online purchases are already part of the landscape 18 | Customers are frequently contacted, but offers aren’t always relevant
NEW BANKING PLAYERS 20 | New banking players: still very limited awareness and use of services 20 | GAFA & neo-banks: still little enthusiasm despite their emergence at European level 20 | New uses with which internet users are still not familiar 22 | Social networks
CONCLUSION 23 | What lessons can be drawn by banks?
INTERVIEWS 24 | Antoine Pichot, Co-Head of Strategy, Digital and Customer Relations, Société Générale 28 | Marco Bragadin, CEO, ING Italy 31 | .Katarzyna Prus-Malinowska, Digital Banking Director, Bank Zachodni WBK 34 | Nazim Erdogan, Head of Digital Banking, TEB 37 | Luca Vanetti, Digital & Omnichannel Banking, Banco BPM SpA
2 Digital Channels III: internet and financial services in Europe
Foreword
The “Digital Channel” survey, carried out in collaboration with Efma, provides an overview of the main trends as regards the use of digital banking channels. An eighth country, namely Spain, has been added to the survey, which now covers a broad spectrum of diverse banking relationship models: France, Germany, Italy, the Netherlands, Poland, Spain, Turkey and the United Kingdom.
The first two editions, published in 2011 and 2013, had highlighted the strong growth in the use of digital channels in the banking relationship.
• How do customers connect to their banks today? Which channels do they use? How often? • What is the role of digital channels in the banking relationship? What do customers do when they log on remotely? • How are digital channels used to purchase financial products? What types of products are purchased via these channels? • How are social networks integrated into digital strategies? How are they perceived by customers?
In 2017, for the third edition, new topical issues facing European banks are addressed.
• What is the role of digital relationship marketing and how is this integrated into the customer digital journey? What is the most appropriate level of customer autonomy in after-sales management? • How far have innovative services been appropriated (means of payment, Fintech platforms, etc.)? • How are online banks and new entrants perceived?
This survey, based on the answers of more than 4,000 respondents and interviews with senior banking executives, reveals significant differences in utilisation rates, usage, satisfaction and expectations among internet users vis-à-vis their bank.
Several topics which are currently major marketing and commercial issues for banks are addressed in this report.
We hope that the findings of this survey will shed light on the expectations of your customers and help you anticipate the impact of the quickening pace of digital development.
Vincent Bastid Philippe Derambure CEO, Efma President – Founding Partner Exton Consulting
3 INTRODUCTION
Methodology The conclusions of this survey are based on an online survey conducted in November 2016 involving 4,000 respondents (500 in each of the eight countries) aged between 18 and 74.
Definitions:
• The “8-countries average” corresponds to the unweighted average of the eight countries surveyed. • The term “internet users” refers to the whole of the population having internet access, that is to say the population covered by the survey. • The term “mobile internet users” refers to the whole of the population having a mobile phone and/or internet-enabled tablet.
Technical note:
• As the figures represent a population of internet users, the structure of the samples is not systematically representative of the country’s population as a whole. • The data therefore reflect the trends of a population of internet users.
Acknowledgements We wish to thank the following contributors in particular for their testimonies:
Antoine Pichot, Co-Head of Strategy, Digital and Customer Relations, Société Générale Marco Bragadin, CEO, ING Italy Katarzyna Prus-Malinowska, Digital Banking Director, Bank Zachodni WBK Nazim Erdogan, Head of Digital Banking, TEB Luca Vanetti, Head of Digital & Omnichannel banking, Banco BPM
And the following Exton Consulting authors:
Philippe Vervloedt, Partner Martin Tixier, Partner Jocelyne Amegan, Principal Anne-Séverine Calandreau, Manager
4 Digital Channels III: internet and financial services in Europe Executive summary
Increasingly digital customer journeys, but with banks increasingly present
France, Germany, Italy, the Netherlands, Poland, Turkey, the United Kingdom and Spain: digital channels are popular in each of these countries.
Branches continue to feel the effects of the digitalisation of banking practices, with branch networks having shrunk by 7% on average between 2012 and 2016 in the eight countries surveyed by Exton consulting*, except for Poland and Turkey where the density of branch networks has increased. However, this shrinking of brick-and-mortar networks has not been accompanied by a decrease in the accessibility of personal relationship managers, since the current rate of 39% is two percentage points higher than in 2012. France is almost an exception with 89% of internet users declaring that they have access to a personal banking advisor at their main bank.
The use of internet banking continues to increase: 87% of internet users log on at least once a quarter and 28% are “heavy” users who log on daily.
Mobile banking has recorded exponential growth. The change in the number of connected smartphone and tablet owners has a huge and direct impact on the use of mobile internet banking: the number of users has doubled, they log on between 2 and 3 times a week, and more than half of them have downloaded their bank’s app (x2 vs. 2012). Lastly, satisfaction with mobile banking has now bridged the gap with fixed internet banking with an NPS (net promoter score) up by 30 percentage points.
Once they have logged on, users mainly carry out simple everyday banking transactions. In this regards, the types of internet and mobile banking uses are very similar. Nevertheless, the proportion of complex, participatory transactions has increased by around 10 percentage points, driven by the under-40 age group. Upstream of transactions, 66% of internet users prefer to search online for information on a financial product. When it comes to purchasing products, 37% prefer to purchase simple products online.
Nevertheless, there are still significant cleavages: in France, where the relationship model is based on access to a banking advisor, only 21% of internet users say that they have purchased a financial product online, compared with more than 30% in the United Kingdom and Turkey.
So, how can banks move things forward? First of all, the customer journey must reflect a rapid, simple, practical experience… with customer support along the way:
• Half of internet users appreciate being recontacted following an internet search, preferably by email (49%) or by telephone (37%) • and 43% want to have the support of a banking advisor when finalising their purchase.
Upstream, these journeys need to be better promoted and more closely targeted: more than 50% of respondents said that receiving promotional offers or personalised pre-selected offers would encourage them to purchase products… moreover, one-third of respondents consider that the offers received from their bank are unfortunately not relevant.
At this time, more than a quarter of internet users would be willing to open an account with a new digital entrant (Google, Amazon, Facebook, Apple) and are prepared to test new Fintech offerings. Respondents in France and the Netherlands are the most cautious: only 21% and 11% of internet users would be willing to open a bank account with these digital players. This playing field could enable Fintechs and neo-banks to increase their market share in some specialised products and services. On
5 the other hand, there is still a significant image problem: two-thirds of internet users have not heard of crowdfunding platforms, only 10% of them use an account aggregation service and fewer than 5% of them use an investment platform.
What lessons can banks learn from this? First of all, the need to treat mobile banking as a preferred relationship channel. Beyond the established success of banking apps, banks need to enhance their mobile offering: videoconferencing, chat advisors, customisable alerts and notifications, etc.
Next, improving the actual experience by redesigning the customer journey, across all channels, in order, for example, to natively integrate compliance, share dematerialised documents and propose remote support (tutorials, dynamic FAQ, chatbot, etc).
Lastly, new player offerings enable internet users to buy and construct their financial services according to the best offers (price, service, technical features, etc.). The challenge facing banks is therefore to strike an economic balance for each type of product, to use the services and offerings of niche players… while remaining the preferred contact point in the customer relationship. Integration or partnership? The optimal model is still a work in progress.
6 Digital Channels III: internet and financial services in Europe The banking and digital landscape remains mixed
In all countries customers are increasingly likely to have multiple financial product providers…
Against a backdrop of a very high bank account penetration rate, which is close to 100% in all countries, except for Turkey, and almost one-third of multi-banked customers, the number of customers having purchased financial products from different financial institutions is increasing. Turkey and the United Kingdom have the highest proportions of customers having several financial product providers: 59% and 57% respectively.
Banking and digital landscape of eight countries
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… but the situation differs as regards their brick-and-mortar networks
The digitalisation of banking practices is having a direct impact on branch networks, with an average decrease of 7% in branch density in the eight countries surveyed between 2012 and 2016, except in Poland and Turkey where the density of networks has increased. With 372 branches per one million inhabitants, Poland is now close to the average of the countries surveyed (377), while Turkey lags behind with 200 branches per one million inhabitants.
7 However, this shrinking of brick-and-mortar networks has not been accompanied by a reduction in the availability of personal banking advisors, since the current rate of 39% is two percentage points higher than in 2012. France is almost an exception with 89% of internet users declaring that they have access to a personal banking advisor at their main bank.
Rate of access to a personal banking advisor at the customer’s main bank
N S T
8 Digital Channels III: internet and financial services in Europe FIXED AND MOBILE INTERNET Fixed and mobile internet: explosive usage growth
Fixed internet banking at the stage of maturity
The use of fixed internet banking continues to increase, with average growth of eight percentage points since 2012.
87% of internet users log on at least once a quarter and 28% are “heavy” users who log on daily. Although Poland, France and the Netherlands are the biggest users of fixed internet banking, the gap with Turkey, which is the country with the lowest utilisation rate (80%), is narrow.
The proportion of fixed internet banking users has increased slightly Proportion of fixed internet banking users and the frequency with which active users log on
3,2 2,8 2,9 2,9 2,8 2,7 2,7 2,7 2,4
N S T
Mobile internet: increased use among the European panel
The use of mobile internet has surged:
• The number of owners of internet-enabled mobile phones has increased by 18 percentage points since 2012 and now stands at 86% of the population of the countries surveyed. • More than half of Europeans now have an internet-enabled tablet, i.e. twice as many as in 2012. • This trend is likely to continue: more than a third of non-owners intend to acquire one in the next twelve months.
9 One main reason for this is the maturity of mobile telephony technology: numerous types of smartphones (including low-cost models), 3G, even 4G territorial coverage, etc.
This increase in the number of owners of connected devices is having a huge and direct impact on the rise in the use of mobile internet: 54% of mobile internet users log on to internet banking, i.e. twice as many as in 2012. Turkey and Spain top the list, with 66% and 61% respectively of mobile internet users who regularly log on to their bank.
The number of mobile internet banking users has doubled Number of mobile internet banking users and the frequency with which active users log on
3,0 2,7 2,8 2,5 2,6 2,5 2,3 2,2 2,1
N S T
10 Digital Channels III: internet and financial services in Europe The banking app download rate has also doubled, increasing from 27% in 2012 to 53% in 2016.
This trend is being driven in particular by young people (18-29 year-olds) and active young people (30-39 year-olds) with a download rate of more than 60%.
Turkey stands out: two-thirds of mobile internet users have downloaded a banking app.
The proportion of mobile internet users having downloaded their bank’s app has doubled Proportion of mobile internet users having already downloaded at least one of their main bank’s apps
N S T
11 Improved customer satisfaction
The increase in the use of mobile banking is also reflected in increased customer satisfaction in almost all countries, with an average score of 7.9 percentage points in 2016 versus 7.4 percentage points in 2012.
In 2016, as in 2012, the United Kingdom’s score is above the 8-country average (7.9 percentage point in 2012 and 8.3 percentage points in 2016), while France has recorded the biggest increase, from 7 to 7.9 percentage points, since 2012.
Lastly, satisfaction with mobile banking has caught up with fixed internet banking with an NPS (Net Promoter Score) up by 20 percentage points, and even by 30 percentage points in France.
Change in the website NPS* and Mobile NPS vary considerably mobile bank NPS between countries
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This satisfaction with the mobile channel is mainly due to the more sophisticated interfaces of apps, the revamped mobile customer experience and the increased number of mobile services available.
12 Digital Channels III: internet and financial services in Europe Despite the rise of mobile internet banking in the eight countries surveyed, there has been no cannibalisation with fixed internet banking. Overall, the 2012 and 2016 findings are very similar:
• 2% of internet banking users log on solely via a mobile device (identical to 2012). • 34% of internet banking users log on solely via a fixed internet connection (identical to 2012). • 53% of internet banking users log on via a PC and a mobile device (+ 3 percentage points since 2012).
The use of the various devices varies in particular according to the time of day: via a mobile phone, when customers are on the move, in particular in the morning, with customers more likely to use a PC or tablet during the daytime or in the evening, simultaneously with another screen (for example a TV).
Another finding of the survey: once they have logged on, users mainly carry out straightforward everyday banking transaction, in a very similar way between fixed and mobile connections. Nevertheless, the share of complex and participatory transactions has increased by around 10 percentage points, driven mainly by the under-40 age group. These participatory transactions mainly involve viewing and managing investments and searching for product information. In terms of basic uses, viewing account balances is, as in 2012, the most frequent use, via fixed internet (44%) or a mobile device (39%), followed by simple transactions such as credit transfers and requesting a cheque book (18% via fixed internet, 17% via a mobile device).
The transactions carried out via fixed internet and via the mobile channel are very similar, with one-third of participatory transactions Breakdown of activities on the main bank’s website and app
Via fixed Internet Via app or mobile website
Basic transactions Participatory transactions C S S E C N T
13 CUSTOMER JOURNEYS ARE MORE DIGITAL Customer journeys are more digital… but with an increasingly strong bank presence
Digital channels are used frequently, but for transactions which remain straightforward
Once they have logged on, users mainly carry out simple everyday banking transactions; this applies to both internet and mobile users:
• 86% use the internet, a mobile app or an in-branch ATM to view their account balances. • 82% use the internet, a mobile app or an in-branch ATM to search for practical information.
The proportion of complex and participatory transactions has increased by around 10 percentage points, driven by the under-40 age group. Upstream of a transaction, two-thirds of internet users prefer to search online for information on a financial product and 73% declared that they prefer to purchase simple financial products online.
Preferred channels of internet users by type of transaction
S S T C
emote transactions Transactions with human assistance E T T T T
For the most complex transactions, internet users continue to prefer channels with human support, allowing for direct interaction with a bank specialist. Accordingly, users are still very attached to their banking advisor for participatory transactions, such as taking out a loan, for which more than half of respondents want such support.
14 Digital Channels III: internet and financial services in Europe A pre-sales process boosted by commercial proactivity
Our survey reveals that during the pre-sales stage, 50% of internet users appreciate being recontacted by their bank following an internet search. Internet users in Turkey and Italy in particular (countries with the highest mobile internet penetration rates) are the most enthusiastic about this approach. In the other countries, excluding Poland, a majority of respondents prefer not to be recontacted.
Proportion of internet users who welcome being recontacted following an online search
N S T
In the eight countries surveyed, digital channels are favoured for:
• The pre-sales stage: 66% of internet users prefer to search online for information on a financial product. • Purchasing products: 37% declared that they prefer to purchase simple financial products online.
Nevertheless, there are still striking differences: in France, with a relationship model which hinges on access to a banking advisor, only 21% of internet users said that they have already purchased a financial product online, compared with a rate of above 30% in the United Kingdom and Turkey.
So, how can banks move things forward? First of all, the customer journey must reflect a rapid, simple, practical experience… with support: half of internet users appreciate being recontacted following an online search, preferably by email (49%) or by telephone (37%).
The survey also reveals that pre-sales services are key drivers for online purchases. On average, 51% of internet users consider that receiving pre-selected, personalised information by email would encourage them to purchase products online. The same applies as regards promotional offers for 58% of respondents. Internet users in Turkey and Spain are particularly enthusiastic in this regard.
15 Numerous pre-sales services can boost online product purchases
N S T
N S T
16 Digital Channels III: internet and financial services in Europe Online purchases are already part of the landscape
One-third of European internet users declared that they have already purchased a product online, most notably in Turkey (37%). On the other hand, France, where the relationship model is still built around personal banking advisors, lags behind with 21%.
Other than differences between countries, online purchasing habits also vary according to the products. On average, not surprisingly, savings and payment products are the products the most frequently purchased online: 19% and 18% respectively.
Loans, which are a more complex, participatory product, are the product the least likely to be taken out online: 10% of internet users have taken out a consumer loan online, compared with only 6% for a mortgage. Despite different regulatory contexts, there are relatively few differences between countries.
What encourages internet users in the countries to purchase financial products online? Contrary to popular belief, the survey reveals that the price variable is relatively unimportant (ranked only sixth among seven selection criteria). As in 2012, rapidity, simplicity and accessibility from the comfort of the user’s home are the three most frequently mentioned variables.
What are the reasons for purchasing products online
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17 Customers are frequently contacted, but offers aren’t always relevant
The respondents said that they are contacted on average 29 times a year by their main bank.
They are mainly contacted by post and email. They are the most frequently contacted on an annual basis via digital channels; around seven times via email, six times via the customer area and five times via a text message.
Internet users are frequently contacted, mainly via digital channels
T T E S C
77% of internet users said that they are satisfied with this level of contact, while 11% consider that they are contacted too often and 12% answered not often enough.
The message open rate varies by more than 20 percentage points between the various channels: while almost two-thirds of letters are systematically opened, less than half of messages in the customer area are opened. The most effective channels are the personal channels: post, text messages and emails.
On the other hand, 38% of internet users consider that the messages are not relevant.
18 Digital Channels III: internet and financial services in Europe The message open rate varies by more than 20 percentage points between the various channels
T E S C
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19 NEW BANKING PLAYERS
New banking players: still very limited awareness and use of services
GAFA & neo-banks: still little enthusiasm despite their emergence at European level
Neo-banks have emerged and developed since 2010, and increasingly rapidly in Germany, the United Kingdom and France in the last few years (N26, Compte Nickel, C-Zam, Monzo, etc.). Although these players (and their GAFA big brothers) represent a long-term threat, they seem to be seen as less of a threat over the short term by the internet users who participated in the survey. Less than one-third of them would be prepared to open an account with a digital new entrant. Respondents in Italy, the United Kingdom and Spain seem to be the most enthusiastic about opening an account with such players. Internet users in the Netherlands still seem to be reluctant to open an account with the GAFA, with only 11% of positive answers. Lastly, the most affluent respondents and thirty year-olds are the most likely to be willing to open an account with a digital player.
Internet users ready to open a current account with a new digital entrant (e.g. Google, Amazon, Facebook, Apple)
N S T
New uses with which internet users are still not familiar
M-payments, crowdlending, P2P transfers are just some of the many new means of making payment and transferring money that have emerged recently thanks to digital and new technologies. The survey shows that these new uses are still at an early stage: in the process of being adopted or little known, depending on area.
That is the case in particular of m-payments, boosted by the number of merchants equipped with terminals and the availability of NFC technology at all card issuers. Since 2013, the use of m-payments has increased twelvefold in the countries surveyed, with an average of 49% in 2016. Respondents in Poland, Spain and the United Kingdom are the most enthusiastic about such payments. However, 15% of internet users are still unfamiliar with this technology. On the contrary, 56% of the most affluent internet users have already tested this technology.
20 Digital Channels III: internet and financial services in Europe The use of contactless payments has increased twelvefold
N
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While contactless payments are a new usage that has skyrocketed in the countries surveyed, use of the others is more limited. For example, as regards crowdfinancing platforms:
• 66% of internet users are not familiar with them (in particular, those aged over 60, since 80% of them have not heard of such platforms). • On average 5% of internet users have used such platforms (only 2% in the Netherlands versus 10% in Turkey).
In comparison with 2012, the use of non-banking services has increased, in particular for aggregators and PFM. In the countries surveyed, non-banking services apps have gained ground vis-à-vis banks:
• + 2 percentage points vs. 2012 for loyalty cards. One in 5 Italians uses a loyalty card app. • + 5 percentage points vs. 2012 for account aggregation. 19% of Germans use an account aggregator. • + 17 percentage points vs. 2012 for PFM. 10% of Turkish respondents use a bank PFM app.
21 The use of non-banking services has increased strongly since 2012, but such services are still used by fewer than 10% of internet users
Social networks: increasingly present in the life of internet users but their banking legitimacy is still a work in progress
In the same way as neo-banks, the growth of networks has been exponential over the last ten years. In Europe, in 2016, there were 20 million active users of a wide range of social networks such as Facebook, Snapchat, LinkedIn, Instagram, etc. However, internet users seem to be unconvinced about the presence of financial institutions on social networks. A majority are undecided (46%, up by 3 percentage points vs 2012), while 29% (down by 8 percentage points vs. 2012) think that their presence is not appropriate.
Turkish internet users are the most likely to support the presence of banks on social networks (53%), whereas UK internet users (as well as those in the Netherlands, Poland and France) are still undecided (59% for the UK).
What is at stake for banks? Social networks have huge potential as an educational and support tool, as in the case of #SAVine of La Banque Postale with its FAQ videos.
22 Digital Channels III: internet and financial services in Europe CONCLUSION
What lessons can be drawn by banks?
Mobile first Boosting online Multi-financing: An purchases opportunity for new entrants
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First of all, they need to treat mobile banking as a preferred relationship channel. Beyond the established success of banking apps, banks need to enhance their mobile offering: videoconferencing, chat advisors, customisable alerts and notifications, etc.
Next, improving the actual experience by redesigning the customer journey, in order, for example, to natively integrate compliance, share dematerialised documents and propose remote support (tutorials, dynamic FAQ, chatbot, etc.).
Lastly, new player offerings enable internet users to buy and construct their financial services according to the best offers (price, service, technic features, etc.). The challenge facing banks is therefore to strike an economic balance for each type of product, to use the services and offerings of niche players… while remaining the preferred contact point in the customer relationship. Integration of partnership? The optimal model is still a work in progress.
23 INTERVIEW
Antoine Pichot
Co-Head of Strategy, Digital and Customer Relations, Société Générale
87% of internet users now bank online vs. 85% for a large retail bank addressing a wide range in 2012: can you confirm the high level of internet of customers and services. That has forced us to banking usage in your country? Do you think we rethink the way we develop our services in order have reached maximum usage? Is there still room to mutualise costs. for improvement as regards this channel? But things are changing rapidly and mobile I’m not surprised by these figures. France has internet is set to take over as it opens the way for always been ahead in this area. Don’t forget new services. By customising our app environment that we invented Minitel long before the massive to different customer segments and using all the expansion of the internet and used it to develop technologies now available to simplify the use of banking services in the late 80s. our app, we should be able to develop mobile usage even amongst seniors. There’s still considerable room for improvement. We face three challenges: 1) continuing to develop our traffic by encouraging our customers to be more and more active (once every six months is Mobile banking not a target), 2) increasing the penetration of our has certainly been services beyond basic features, and 3) continuing to develop smartphone usage. driving growth in traffic for the last 54% of internet users connect to their bank three years and on their smartphone or tablet vs. 28% in 2012 (60% among internet users who have a that will continue smartphone or internet-enabled tablet), but this percentage is still segmented by age group: what are the key drivers of this utilisation rate Satisfaction with mobile banking has increased in your opinion (technology, app downloads, significantly since our last survey and its NPS specific features, offerings, etc.)? Which level has reached that of internet banking: how levers do you think could increase this rate, do you explain this increase (communication, especially among older people? Do you app downloads, habits, new features, better user think fixed and mobile internet banking are experiences, etc.)? complementary channels or will one end up cannibalising the other? Banks have been investing heavily in their apps. Take the example of Société Générale, we’ve Mobile banking has certainly been driving growth significantly increased the range of information in traffic for the last three years and that will and services available and almost bridged the continue. But we shouldn’t stop investing in fixed gap with our fixed internet website. We totally internet banking. First, it’s more suited to certain redesigned our app in 2015 and put a lot of segments, especially seniors. But age is not the effort into UX and design. We’ve also developed only factor. For some features, which require innovative payment services which, by definition, more time (such as PFM) or are seen as sensitive only come with a smartphone app (P2P transfer via and/or risky (market orders), people feel more SMS, contactless payment, etc.). comfortable or secure using fixed internet. At the moment, fixed and mobile are still complementary We’ve also started to communicate more intensively channels and a pure mobile strategy isn’t relevant about our online services, and especially our app,
24 Digital Channels III: internet and financial services in Europe Antoine Pichot Société Générale
via mass media. And finally, we’ve put a lot of effort written in small characters on a 5.5-inch screen… into having staff in our branches and call centers you might not survive the experience! promote our app to their customers. As for consumer loans, the offering has improved and banks such as Société Générale now offer 27% of internet users state that they have a fully online purchase process with no further purchased financial products online: are you exchange of paper documents. We haven’t surprised by the figure for your country? Which reached that stage when it comes to mortgages. financial products can be purchased fully online Most online players offer basic mortgages but the in your country? Do bank services differ from process still involves exchanging paper documents. one bank to another? Online consumer loans The situation will change but, again, this is a and mortgages have increased since our last highly regulated area and we have to deal with survey in 2012: do you feel specific efforts have dozens of different kinds of mortgages, some of been made in your country to develop online which are difficult to make paperless. purchases of these products?
Purchasing financial products online is still 27% of internet users state that they would be lagging behind in France, especially on ready to open an account with a non-financial smartphones. However, banks are catching up digital player (e.g. Google, Amazon, etc.): and starting to offer fully online processes to do you feel threatened by these new potential replace old forms. We also have to deal with competitors? What competitive advantages regulatory constraints that sometimes make it could they/you as a bank have? difficult to offer acceptable customer journeys, especially on smartphones. Imagine having Digital technology has opened the door to new to sign tens of pages of regulatory documents players, whether large internet companies, fintech
25 start-ups or, in France, more traditional players it’s just that they’re not accustomed to it such as large retailers and Telcos. Some are when it comes to banking products. From our looking to be part of our value chain, while others experience, we can definitely say that digital intend to disintermediate us altogether and prevent pre-sales promotions have an impact. But that’s us targeting our customers on a day-to-day basis. not enough. There’s still room for improvement These newcomers may also take advantage of when it comes to customer journeys. We should forthcoming regulatory changes, which will remove also be much more customised in our offers some existing entry barriers (mainly PSD2). As and pricing. The platform that most French newcomers, they enter the market without a legacy, retail banks are now building, using the latest are quite flexible and can take a fresh look at our technologies, should help them tackle these existing business, usually with a strong focus on the issues in the near future. customer experience.
Though they’re being challenged, banks such as Société Générale can rely on major strengths. We’ve developed strong expertise in Digital channels will digital technology, have managed to generate considerable traffic and are still investing continue to grow and massively. We know how to manage and use progressively enter all data. That has been our core business for years and we can rely on solid infrastructures providing areas of banking a very high level of security. We can also leverage our image as a trusted third party to explore new business areas. There are many opportunities for existing banks, as long as they focus on the customer experience, which might require a How do you see the future of digital channels in change in mindset for some of them. France and their impact on the different financial service providers (retail banks, online banks, fintechs, etc.)? In France, app downloads seem to be far below average. In your opinion, what’s the We’re just at the beginning of the digital revolution reason for that? that data and new technologies, such as AI, will boost. Digital channels will continue to grow and Though I’m a bit surprised by these results, it may progressively enter all areas of banking. The be linked to the fact that some French banks have question is what should the different financial had a slow start when it comes to mobile banking. players make of it? As powerful as it may be, it’s a In other European countries, banks might have means to fulfil a strategy. invested earlier and had their salesforce promote it more widely. But I think that we’re catching up Retail banks have started to reduce their branches fast and the recent ratings of French banking apps, and might continue to do so but there is a risk that starting with Société Générale, in various studies they might throw their model away at the same make me optimistic. time. On the contrary, they have an opportunity to reinvent it using digital technology. The winners will be those that succeed in combining In France, internet users seem to be less digital and human aspects most effectively to receptive to pre-sales promotions in their address all customer needs, without seeing digital customer journeys. In your opinion, how could technology as the only way to improve day-to-day banks respond to that? operations, while branches focus on added value advisory services. Helped by regulatory changes, I’m not sure that we should jump to conclusions fintechs and neo-banks definitely have a unique as digital marketing still isn’t very developed opportunity to grow. They can move quickly when within retail banks in France. I don’t see why it comes to day-to-day banking, but how long will it French customers should be different; maybe take before they can provide a whole combination
26 Digital Channels III: internet and financial services in Europe of services that make up the value of existing invested huge amounts. We can now rely on a very banks? As for online banks, they need to question competitive platform, which provides a full range of their business model. They’ve been very effective services and has been a real hit with our customers, at digitalising today’s banking business but have and strong expertise in both design and execution. done less to reinvent it. Digital technology isn’t enough to stand out now. Today, we’re moving in several directions. Firstly, we’re investing massively in equipment and training Ultimately, the digital revolution forces each player our relationship managers in our branches and to think more and more about the differentiating our call centers to help them promote our digital factors it can offer. platform. Secondly, we’re working at making our digital services easier to use and incorporating them into customer journeys in a much more proactive What do you think are the key factors for a way. That’s what we’ve started to do by offering successful digital strategy? our customers a wide range of alerts. For example, a customer can’t pay at a restaurant? He or she Much more than technological changes, embracing will receive an alert stating that the credit card limit the digital revolution requires a change in mindset. has been reached and giving him or her the option I might be stating the obvious but if you don’t truly to increase the limit online instantly. And that’s make the customer central to the process, you will just the start as we intend to act more and more fail. And believe me, there’s room for improvement. as our customers’ financial coach, helping them To make it happen within Société Générale, we’ve on a day-to-day basis. Thirdly, we’re redesigning introduced new ways of working, extending the our customer journeys to engage them in more working methods that proved successful within the proactive purchasing. That’s where data can make digital teams to the rest of the bank. For example, the difference, but we’re also working on combining we’ve launched design thinking on quite a large digital technology with our call center expertise to scale. I can tell you that when the organisation increase the value of our service significantly. And gathers to watch a video showing customers sitting finally, we intend to use digital channels to recruit at their kitchen table and talking about their day- new customers. Some European fintech companies to-day relationship with their bank, that’s worth have recently set new standards in customer more than thousands of studies and meetings. onboarding and we definitely won’t lag behind! n Before projecting what you think is good for your customers, you should take the time to listen to them.
AUTHOR BIO: ANTOINE PICHOT Another key factor for success is maintaining the conditions for efficient and effective execution. At Société Générale, digital and marketing are 1996: Antoine Pichot began his career in the working very closely with IT. We trust each other, Inspection Department of Société Générale where he we share the same strategy, and we co-design carried out various assignments in France and abroad. every solution and positively challenge each other. After a sabbatical year during which he worked as That’s a way to compensate for our size and a microfinance consultant, he moved to Oslo with remain agile. responsibility for the integration of SG Finans, the leasing and factoring subsidiary, attached to DSFS (specialised financial services and insurance) Which specific initiatives have you implemented 2007: Corporate Director, Regional Division at Société Générale as regards the development of Neuilly of digital channels? 2010: Chief of Staff to Jean-François Sammarcelli and Bernardo Sanchez Incera, Deputy CEOs of the When it comes to digital technology, Société Société Générale Group Générale has always been at the cutting edge of 2013: Head of Multichannel Banking, Société innovation. We started to invest significantly at Générale, Retail Banking the turn of the century. We were among the first to 2015: Co-Head of Strategy, Digital and move towards mobile banking in 2010, launching Customer Relations. the first version of our app. Since then, we’ve
27 Marco Bragadin
CEO, ING Italy
87% of internet users connect to internet banking time, for example when mobile devices are used – vs 85% in 2012: do you confirm the high level for strong authentication features. of internet banking usage in your country? Do you think we have now reached maximum usage? Is there still room for improvement on this channel? Satisfaction with mobile banking has increased significantly since our last survey and its NPS ING Direct has been offering a digital-first approach level has reached that of internet banking: how since its launch in Italy in 2001 and we can confirm do you explain this increase (communication, a high level of internet banking usage. Digital app downloads, habits, new features, better user banking in Italy is not as yet as widespread and experiences, etc.)? dominant as in other markets: higher broadband adoption and mobile shift will be important growth Of course, banks have made huge strides in drivers, since they are increasing the digitalisation enhancing the mobile experience. The experience of the population as a whole. On the other hand, has been largely simplified across the industry: offering almost fully digital services, with simple and tailored communications inform the customer of convenient access to both enquiry and transaction relevant events (transactions, financial events and functionalities will remain a key enabler to grow the so on) and new functionalities have been brought to digital relationship profitably. the market in a timely manner. The real challenge is to keep pushing in this direction: banks cannot rest on their laurels once the main financial services and 54% of internet users connect to the bank on products have been digitalised. In all likelihood the their mobile or tablet – 28% in 2012 (60% players that continue innovating at the same pace among internet users who are equipped with a will make the difference. smartphone or internet-enabled tablet), but this percentage is still segmented by age group: what are the key drivers of this utilisation rate in your 27% of internet users state that they have opinion (technology, app downloads, specific purchased financial products online: are you features, offerings, etc.)? Which levers do you surprised by the figure for your country (26%)? think could increase this rate, especially among Which financial products can be fully purchased older people? Do you think fixed and mobile online in your country? Do offerings differ from internet banking are complementary channels or one bank to another? Online purchases of will one end up cannibalising the other? consumer loans and mortgages have increased since our last survey in 2012: do you feel In our experience, the mobile app is already specific efforts have been made in your country the primary interaction channel, and it is not a to develop online purchases of these products? behaviour mainly driven by younger customers. Also, mobile banking growth is much faster than The market in Italy has undergone a transformation PC banking slowdown: primary relationships over the last 3 to 5 years. There has been a strong show a deep correlation with multiscreen and push from regulatory bodies to move to digital omnichannel behaviour. While mobile apps are services and the regulatory framework now offers unbeatable in terms of convenience and ability to clear opportunities to digitalise sales processes capture customer context in real time, PC devices for financial products. Banks and other financial may still offer a first-class user experience, and are institutions are therefore now offering a full range preferred for productivity tasks. In this perspective, of financial products online. The consumer loans fixed and mobile internet banking are more market is one of the most mature in terms of digital complementary, and can even be used at the same offerings, but it’s not the only one: payment and
28 Digital Channels III: internet and financial services in Europe saving accounts, as well as payment cards are part of the digital offering, whereas investment products and mortgages are still perceived as mainly face-to-face products. Nonetheless, several trends show us that, especially in investments, digitalisation is ramping up quite fast.
27% of internet users state that they would be ready to open an account with a non-financial digital player (e.g. Google, Amazon, etc.): do you feel threatened by these new potential competitors? What competitive advantages could they/you as a bank have?
We must be aware of the threat of non-financial digital players because they have several strengths to exploit: they are able to drive high traffic volumes to their digital properties, they usually have faster innovation cycles and their one-size-fits-all offering is usually cost effective. These are serious topics: Marco Bragadin relationships are driven by the frequency of ING Italy interactions and continuous innovation enhances the quality of such interactions. Banks have to transform their business model and dramatically improve interactions, both quantitatively and qualitatively, in functionalities to digital self-service and offering order to stay relevant for the customer. That being a remote expert to support, via for example a said, banks are still able to assist the customer video session, the purchasing process for complex across a wider range of needs than those so far products, such as mortgages and investments. addressed by tech giants. Banks have to invest in providing the best and most relevant customer experience in such moments: the combination of Online purchases of financial products (credit/ experience and knowledge of customer needs will debit cards, consumer and housing loans, and be the strengths to leverage going forward. saving/investment products) have increased quite significantly since 2012 in Italy (17% to 26% of Italian internet users): how do you explain this? 46% of Italian internet users with a current Do you feel this rate will continue to increase? account (85% in France) have a personal banking relationship manager: given the very These figures are quite similar to eCommerce high density of Italian banking branches (501 growth trends, and could be based on the branches for one million inhabitants), how would same pattern. While electronic payments and you explain this low figure? eShopping are becoming the new norm, no surprise financial products are also affected by A lot of branches and few personal relationship the same consumer attitude, and online purchases managers may be the proof that in Italy the digital of such products will continue to increase. The transformation journey is still at the beginning and regulator will help to further accelerate the online that a large percentage of the population continues share of business through, for example, digital to rely on human assistance for basic transactions, signatures and eIDs. rather than for value-added advisory services.
Strategically, the distribution approach should 87% of Italian internet users who have link the capabilities of digital banking and human purchased financial products online claim that channels, for example leaving simpler products and one reason, among others, is the low price.
29 financial services leading. Mobile will drive Strategically, the most of the contacts in the short term, with great distribution approach focus on improving the customer experience during both the sales and service processes. should link the Meanwhile I expect two main trends to increase capabilities of digital in relevance: human assisted digital contacts and information aggregation, mainly following PSD2 banking and human full implementation. Other improvements may be related to AI, but this will require a longer channels timeframe to deliver benefits to the end customer.
This is the highest rate in Europe: do you feel Which specific initiatives have you implemented that Italian banks have made special efforts as (or are implementing) as regards the regards the pricing of online offerings? development of this channel and other innovative digital channels? Italy has a history of high-price financial products, at least compared with European peers. Of course, Digitalisation of sales processes has been one of customers now see the opportunity to significantly the main focuses so far and there are still some improve value for money in their relationship relevant improvement opportunities to grasp. with financial institutions. It shouldn’t come as a Increasing the quality of mobile interactions and surprise: this has already happened in a number providing a human touch in interaction with of industries, from telecommunications to retail. complex and value-added products will be the Banks are rapidly adapting: there is certainly still two fields where ING will invest consistently. room to improve and guarantee a fair price for At the same time, we’ll keep the door open to customers. Banks have to develop properly priced, other potential innovations. Moreover, we will differentiated offerings covering different customer leverage ING’s position as a leading European needs, and not sacrifice the quality of customer bank to seek opportunities to standardise our services in order to reduce prices. digital platform across countries in order to guarantee the same customer experience to ING customers regardless of where they are, thereby 15% of Italian internet users have already paid fully exploiting innovation and delivery on a with smartphone/e-wallet and 8% with Apple Pay global scale. n (two highest rates in Europe): is Italy specifically ahead as regards innovative means of payment? How would you explain Apple Pay’s rate (banking AUTHOR BIO: MARCO BRAGADIN offerings or iPhone equipment rates in Italy)?
Italy has been consistently ahead of many Marco joined ING after three years with Banca European peers in terms of mobile adoption. This Monte dei Paschi di Siena, where he was has been partially offset by the relatively intensive director of Retail Banking and Distribution. use of cash, but this is rapidly changing. Looking Before joining Banca Monte dei Paschi di Siena, at trends, e-wallet and mobile payments in general he spent eleven years with Vodafone Group PLC, can be expected to have a high impact in Italy. In where he was Director of Business Development all likelihood the adoption curve will be very steep and, from 2007 to 2012, CEO of TeleTu in over the next few years. Italy. Marco holds a degree in Economics from Bologna University, a Ph.D. in Financial Economics from the University of Bergamo and How do you see digital channels an MBA from the Booth School of Business in developing in Italy? Chicago. He started his career with The Boston Consulting Group. In October 2016, he joined Digital channels will keep on increasing in ING Italia as CEO. terms of relevance across all industries, with
30 Digital Channels III: internet and financial services in Europe Katarzyna Prus-Malinowska
Digital Banking Director, Bank Zachodni WBK
Do you think we have now reached a maximum Branches should focus on the relationship with rate of internet banking usage in Poland? customers and migrating them to digital channels.
Our customers appreciate access to their finances We are also focusing on the human touch offered at any time, without the need to visit the branch, by our Advisor online service, which makes it but we believe this is a very dynamic case, as easier for customers to migrate. there are significant changes in the habits and expectations of our current customers and new 54% of internet users connect to the bank on generations. It is quite possible that the new their mobile or tablet – 28% in 2012 (60% generations (Millennials, gen Y) will boost the among internet users who are equipped with current utilisation rate. a smartphone or internet-enabled tablet) but this rate is still segmented by age group: what are the key drivers of this user rate in your Is there still room for improvement on opinion (technology, app downloads, specific this channel? functionalities, offerings, etc.)?
Yes, definitely. We are continuously working on • Better access to smartphones the development of both the mobile and internet • Familiarisation with mobile apps in general channels. We perceive a particular potential in • Change in trends (customer preference for moving most of the sales processes from branches smartphone/tablet over computers) to the digital channels. Customers should have • Better functionalities (growing number of access to most sales and after-sales processes via features available) the internet channel. • Better product offerings (accounts, deposits) • Better education in terms of use and security.
Which levers could increase this rate, especially among seniors?
We are focusing on branches. Seniors are used to having branch advisors take care of everything. Our aim is to migrate all customers, especially seniors, to digital banking with assistance offered in branches and via Advisor online.
Do you think fixed and mobile internet banking are complementary channels or will one end up cannibalising the other?
At the current development stage we can say that internet banking (computers) is the main digital channel used by customers, but it is Katarzyna Prus-Malinowska slowly being replaced by mobile banking. For Bank Zachodni WBK example, 6% of our digital customers have stopped using internet banking entirely and have
31 moved to mobile banking. Our aim is to provide role to more of an advisory role. These results do customers with different options, so that they can not come as a surprise since they are similar to choose how they want to manage their finances. those of our bank in terms of online sales in general. Right now, we are focusing on delivering all However, in the case of loan products every second features across internet and mobile banking, but product is sold online. And for one in five of those we also want to offer unique mobile features products our customers used a mobile device. dedicated to smartphones.
Satisfaction with mobile banking has increased Our aim is to provide significantly since our last survey and the mobile customers with different banking NPS level has reached that of internet banking: how do you explain this increase options, so that they (communication, app downloads, habits, new can choose how functionalities, better user experiences, etc.)? to manage their We believe that such satisfaction is influenced by the following aspects: finances
• Reliability (no down times) • Adequate communication Which financial products can be fully acquired • Easy login process online in your country? • Rapidity • Functionality • Deposits • Security. • Accounts (and cards) • Loan products (cards, overdrafts, cash loans) In 2011 mobile banking was in its early stages • Investment products and it offered only basic features that weren’t easy to use. Sometimes the mobile channel was Do offerings differ from one bank to another? unavailable for long periods. Most banks offer a similar range of products via We believe that the NPS for internet services is online apps. However, there are some products declining because there is no longer a WOW that are offered exclusively by a limited number of effect, customers are hard to excite. It is regarded banks – e.g. insurance and mortgage. as a standard addition for current accounts. Expectations are higher than ever (especially among younger generations). As mentioned above Online purchases of consumer loans and we are a multi-channel bank and fully believe mortgages have increased since our last survey in the ROPO effect. Our customers have the in 2012: do you feel specific efforts have ability to select the channel they want and switch been made in your country to develop online preferences if they wish. purchases of these products?
We do not offer mortgages online. Most of our 27% of internet users state that they have customers have an online offer for loan products. purchased financial products online: are you surprised by the figure for your country (24%)? 27% of internet users state that they would be People are still learning to buy financial products ready to open an account with a non-financial online, and are not fully convinced by this approach. digital player (e.g. Google, Amazon, etc.): Currently most customers still expect advisors in do you feel threatened by these new potential branches to guide them through most products.We competitors? expect this value to rise dynamically in the following years, as we want branches to move from a sales This is not yet the case in Poland.
32 Digital Channels III: internet and financial services in Europe Which competitive advantages could they/you Poland is considered one of the leaders in terms as a bank have? of contactless payments. Polish banks are open to new forms of payments and provide customers Banks Zachodni WBK has a significant advantage with a growing number of solutions - BLIK, NFC/ over these new players. What our institution HCE, Android Pay. offers is what customers need when thinking about finances – trust and security. What banks offer in general is a complex range of financial Or are Polish people easy/early adopters of products and services (personal finance manager, new technologies? transactions, wide range of product offering, after- sales service) available in one place. As mentioned above Polish customers are really open to new solutions. We have a large group of customers that eagerly await new technologies. Internet banking’s Net Promoter Score in Poland They are our main inspiration when it comes to the is the highest of the eight countries (35): do you newest payment trends. feel that your customers are particularly happy with this channel’s offerings and specificities? How do you see digital channels developing Our internet banking is a dynamically developed in Poland? platform. We aim to offer our customers the functionalities they want. We are one of the The current focus is on: total self-service, mobile banks participating in public sector projects by payments, simplifying online shopping, integrating integrating with the 500+ program. Last week we the latest market technologies and solutions, and received an award for our mobile banking app via most importantly – personalisation. internet voting.
Which specific initiatives have you implemented How would you explain this enthusiasm compared regarding the development of digital channels? with other countries (better user experience, digital appetite, new functionalities, etc.)? • PFM • Mobile payments – BLIK, HCE We believe this enthusiasm of Polish customers is • Advisor online based on: • Mobile shopping (m-wallet) • eFX – foreign currency trading platform • Trust in banks • Sales processes • Openness towards new solutions • After-sales services n • High expectations that are quickly satisfied by banks • Preference for digital channels in general AUTHOR BIO: KATARZYNA PRUS-MALINOWSKA
70% of Polish internet users have already used Katarzyna Prus-Malinowska has been with contactless payment cards (highest rate of our Bank Zachodni WBK since 2008. As the sample of eight countries): how long has this Digital Banking Director, she is responsible technology been available in Poland? for mobile and Internet banking business strategy – including Internet sales, CX, UX, Bank Zachodni WBK was one of the first banks in mobile payments. Poland to offer contactless payment cards. They She previously worked as the Digital have been available since 2007. Marketing Director and was responsible for setting up the Internet communication strategy. She holds a degree in European Studies from Would you say that Poland is a leader in the Adam Mickiewicz University in Poznań. field of innovative means of payment?
33 Nazim Erdogan
Head of Digital Banking, TEB
54% of internet users connect to their bank have also been added to mobile apps, such on their smartphone or tablet vs. 28% in as withdrawing money with QR codes and 2012 (60% among internet users who have biometric authentication. Older people have a smartphone or internet-enabled tablet), also started using smartphones and the but that percentage is still segmented by utilisation rate is rising fast. We think that age group: what are the key drivers of this smartphones will be the ultimate channel and utilisation rate in your opinion (technology, internet banking will disappear in time. We app downloads, specific features, offerings, are moving from a smartphone-first world to a etc.)? Which levers do you think could smartphone-only world. increase this rate, especially among older people? Do you think fixed and mobile internet banking are complementary channels or will Satisfaction with mobile banking has increased one end up cannibalising the other? significantly since our last survey and its NPS level has reached that of internet banking: how There are many reasons why mobile banking is do you explain this increase (communication, increasing: first of all, as customers have their app downloads, habits, new features, better user smartphones with them 24/7, internet banking is experiences, etc.)? possible anytime, anywhere, which is convenient for users. Secondly, smartphone penetration With the increase in mobile use, banks have has increased very rapidly, and so the potential shifted their focus and investment to mobile use of mobile banking has increased as well. channels. Businesses also have more experience Thirdly, customer behaviour has changed in mobile developments and UX has become a radically. In recent years, the number of digital- very important issue. Smartphone screen sizes native companies such as WhatsApp, Facebook, are larger than in 2012. All these factors have Uber and Airbnb and the use of social media improved customer satisfaction. have increased substantially. Companies such as Apple and Google have also taken the lead in technological developments. Customers 27% of internet users state that they have now realise that banking is also available on purchased financial products online: are you smartphones and is very straightforward. The surprised by the figure for Turkey (26%)? use of financial apps has also increased with Which financial products can be purchased this trend. With increasing demand, missing fully online in your country? Do offerings features are quickly added to banking apps. differ from one bank to another? Online Several smartphone-specific extra features purchases of consumer loans and mortgages have increased since our last survey in 2012: do you feel specific efforts have been made in your country to develop online purchases of With the increase in these products? mobile use, banks These results do not surprise us, since customers can acquire all existing products fully online, such have shifted their as current accounts, saving accounts, deposits, focus and investment personal loans, credit cards, cash advances, etc. There are similar services for existing products. to mobile channels In Turkey, CEPTETEB has recently started offering internet-only banking and branch-less products
34 Digital Channels III: internet and financial services in Europe Nazim Erdogan TEB
within the pure digital banking concept. With “Control Panel” enabling customers to choose changing regulations in Turkey, it is possible to their banking settings, such as temporarily take out loans for a certain amount fully online closing credit cards, selecting which account to without visiting a branch. use abroad, using credit cards as debit cards at other banks’ ATMs, etc.
27% of internet users state that they would be ready to open an account with a non-financial 62% (vs. 14% in 2012) of Turkish internet digital player (e.g. Google, Amazon, etc.): users state that they are customers of an do you feel threatened by these new potential online-only bank: how do you explain this competitors? What competitive advantages spectacular increase? could they/you as a bank have? In 2012, there were only brick-and-mortar banks These companies know more about digital offering internet/mobile banking channels. At that customer behaviour and expectations. They time, customers were unfamiliar with the concept have more interactions with customers and are in that market. In the last few years, online- more flexible than traditional banks. That is only banks have been launched and customer not a threat in the short term, but could be in satisfaction has improved with pure digital banks. the medium term. For these reasons, CEPTETEB Therefore, the market is ready for the concept. pure digital banking was not designed as a traditional bank. It was designed to take the customer experience out of branches entirely, Mobile banking satisfaction rates have increased offering users the opportunity to interact with the (8.0 vs. 7.2 in 2012) and are higher than those bank anytime, anywhere via smartphones and of fixed internet banking (7.6), which have enjoy the same experience as with digital giants. decreased: are you surprised by this? How do For example, we believe that giving customers you explain it? control and communicating with them as their friend and in an open way is crucial for digital We are not surprised: the market has been moving customers. Therefore, we have launched the towards mobile banking for the past few years. As
35 start-up ecosystem has grown very quickly and there are several international Turkish Turkey is very good companies. In addition, competition is fierce in digital banking in Turkey. Therefore, banks need at adapting to global to be very innovative to avoid being overtaken trends and adopting by competitors. technology Which specific initiatives have you implemented as regards the development of digital channels?
We have launched CEPTETEB pure digital banking mentioned above, banks have shifted their focus and it provides end-to-end remote customer and investment to mobile developments. acquisition. It has digital-only products, special campaigns and business models.
Turkish internet users are the most active on The CEPTETEB Mobile Wallet function has been banks’ social media channels (38%) and the most activated in CEPTETEB mobile apps. With this enthusiastic (53%) about these channels: can you feature, customers can use QR codes on their tell us more about their role in banking in Turkey smartphones for fast-track TAV Passport services in and give examples of specific initiatives? contracted airports and IDO ferries without using a credit card or ticket. Customers with Android It’s easier to reach and respond to customers smartphones can use the contactless payment through social media than through regular feature at all contactless POS retailers. channels. For that reason, customers have started to prefer contacting their bank via its social Personal Finance Management has been media page. The response time on these channels introduced in CEPTETEB internet banking recently. is also shorter because comments and complaints Customers can monitor their spending by can be seen by other users. Banks also push these category, set budget targets and compare their channels because social media is cheaper to run spending with other customers. n than call centres.
AUTHOR BIO: NAZIM ERDOGAN 10% of Turkish internet users have already used crowdfunding/crowdlending platforms, and 10% also say that they have used investment Nazim has an MBA and an Industrial Engineering platforms (vs. 5% on average in our sample): degree and started his professional career in are you surprised by this high rate? How do you 1999. Nazim joined TEB as Internet&Mobile explain the early adoption? Who are the main Banking Senior Manager in April 2010. Prior to players in Turkey? that, he was Mobile Internet Marketing Manager at Turkcell, which is the biggest mobile operator Because of strict Turkish regulations, there are no in Turkey. He managed the 3G launch project at local market players. Customers are using global Turkcell and was responsible for mobile Internet apps. Early adoption is normal because banks marketing & strategy. He has worked in marketing support start-ups and fintech ecosystems. The and business development at several companies population is also very young, so it adapts quickly. in Turkey. He managed the CEPTETEB digital banking launch at TEB in 2015. Since April 2016, Nazim has been Director of Digital Banking. His How do you see the future of digital channels main responsibility at TEB is the management in Turkey? of CEPTETEB digital banking, development and marketing of digital channels, and business Turkey is very good at adapting to global trends development cooperation with other companies. and adopting technology. In recent years, the
36 Digital Channels III: internet and financial services in Europe Luca Vanetti
Digital & Omnichannel Banking, Banco BPM SpA
87% of internet users connect to internet channel preferences. Today fixed internet services banking – vs 85% in 2012: can you confirm are still more developed, with a wider range of the high level of internet banking usage in features, and high productivity. The use of mobile your country? Do you think we have now services is expected to increase as banks leverage reached maximum usage? Is there still room for their ability to serve customers in real time and improvement on this channel? provide more features.
These numbers show that innovation is an important trend which cannot be ignored. Today all banks are Satisfaction with mobile banking has increased hitting the market with their online digital offerings significantly since our last survey and its NPS and their own mobile banking apps, but there level has reached that of internet banking: how is still a lot to be done. We believe that the most do you explain this increase (communication, important issue for the banking industry, not only app downloads, habits, new features, better user in Italy but also in Europe, consists in maximising experiences, etc.)? banking internet services by simplifying processes and making the customer journey smoother and Banks are focusing on the customer experience, more seamless. This requires extensive work by regardless of whether it involves a fixed or mobile banks to eliminate complex buying processes that device. I am not surprised to hear that satisfaction affect the way in which customers bank today. with mobile services has increased significantly. Removing those roadblocks will be key to enabling Banks are making significant efforts to deliver a comprehensive digital banking growth. highly personalised experience across all channels. Mobile banking is now clearly the focal point for
54% of internet users connect to their bank on their smartphone or tablet – 28% in 2012 (60% among internet users who are equipped with a smartphone or tablet with access to the internet), but this rate is still segmented by age group: what are the key drivers of this utilisation rate in your opinion (technology, app downloads, specific features, offerings, etc.)? Which levers do you think could increase this rate, especially among older people? Do you think fixed and mobile internet banking are complementary channels or will one end up cannibalising the other?
Customers are less patient nowadays, and they want to access real time information quickly and easily, with a financial partner that is an integral part of their daily life. Mobile user numbers are expected to increase regardless of needs and age. If we can provide mobile services with a clean and easy configuration, mobile and fixed internet Luca Vanetti services could be used in a complementary way, Banco BPM SpA serving customers according to their needs and
37 the banking industry and banks have invested to complex products, such as investment products fill the gap with fixed internet services, especially that are traditionally perceived as more face-to- regarding usability and the range of available face products. features. The progress achieved would have been considered unimaginable a few years ago, but growth has also been driven by a substantial 27% of internet users state that they would be change in customer digital habits, starting with ready to open an account with a non-financial everyday habits. digital player (e.g. Google, Amazon, etc.): do you feel threatened by these new potential competitors? What competitive advantages Banks are focusing could they/you as a banking institution have? on the customer This represents a major challenge for the banking sector. While banks are recovering experience, from the downturn, non-banks such as Google, regardless of whether Amazon, Apple, etc. are taking advantage by aggressively leveraging their vast customer it involves a fixed or bases and deep innovation capabilities. In this context payments are one of the most mobile device congested areas, but competition is expected to grow and spread soon to other areas, starting with savings, debit cards, loyalty cards, etc. 27% of internet users state that they have However, we should not forget that traditional purchased financial products online: are you banks are still at the centre of the customer surprised by the figure for your country (26%)? relationship. They should focus on this, by Which financial products can be fully purchased developing the quality of customer interactions online in your country? Do offerings differ from and leveraging customer history/needs. one bank to another? Online purchases of Innovation is key for traditional banks, but banks consumer loans and mortgages have increased cannot respond to these threats simply by being since our last survey in 2012: do you feel more digital, because GAFA digital players specific efforts have been made in your country are digital as well. If they want to defend their to develop online purchases of these products? position, banks must become a more integral part of the commercial lives of their customers. Banks are determined to defend their traditionally large consumer base that values safety, trust and a personalised service, but some new 46% of Italian internet users with a current digital banks and other fintech players are account (85% in France) have a personal challenging them and forcing them to accelerate banking relationship manager: given the very their digitalisation. Moreover, the regulatory high density of Italian banking branches (501 framework has also pushed banks to move in branches for one million inhabitants), how would this direction. Online financial products have you explain this low figure? emerged rapidly and today customers are starting to acquire financial products and services directly In the past, a large percentage of the population online, starting with those perceived as less risky: relied on personal bankers or family bankers new bank accounts, payment card solutions, small for only a very limited number of mainly basic consumer loans. The next step will be to shift the transactions, involving chiefly day-to-day money values of safety trust and a personalised service management, such as withdrawals and payments, from the current physical relationship to a digital but also loans, a widespread means of investment one, which involves convincing our customers, in Italy. At that time, Italy had many bank branches, even those with less financial awareness and but the nature of the relationship remained the expertise, of the high level of product standards same with mostly impersonalised and standardised and services that we offer, regardless of the banking relations, without any strengthening of the channel used. This is particularly important for relationship between family bankers and customers.
38 Digital Channels III: internet and financial services in Europe Today this situation is changing with customers Italy has a long history of mobile usage and becoming increasingly knowledgeable and this has had a significant role in the adoption interested in financial and investment solutions, and of mobile payment solutions. While the use of therefore willing to interact on a regular basis with a cash is still widespread in Italy compared with relationship manager. other European countries, the use of digital payments is expected to grow. Customers will also continue to shift to mobile solutions thanks Online purchases of financial products (credit/ to the simplicity and rapidity of digital payments debit cards, consumer loans and mortgages, and the low perceived risk of this solution saving/investment products, etc.) have increased significantly since 2012 in Italy (17% to 26% of Italian internet users): how do you explain this? How do you see digital channels developing Do you feel this rate will continue to increase? in Italy?
The market in Italy has seen a transformation in this Digital channels are expected to grow in all area over the last 3 to 5 years. Buying products industries and financial services are now more online has become a trend, with an increasing interested in this ongoing transformation. Today number of businesses operating online, thereby digital channels are widely used as a source of helping to change customer habits and creating information and an increasing number of people trust, while reducing risk perceptions. These patterns are starting to acquire financial products and have been beneficial for banks, leading to a services directly online. However, an important progressive growth in online financial production, part of the purchasing experience and the after- but a lot still has to be done, especially for more sales component require attention in digital complex products. channels, for both fixed internet and mobile services, in particular as regards the purchasing experience, since banks need to offer an 87% of Italian internet users who have enhanced customer experience. subscribed financial products online claim that one reason, among others, is the low price. In the short term, banks need to carry out This is the highest rate in Europe: do you feel extensive work on eliminating complex buying that Italian banks have made special efforts as processes in order to ensure a fully digital regards the pricing of online offerings? experience on both channels. In the long term, banks also need to address new emerging This figure does not come as a surprise. Compared trends: robots/virtual financial assistants, artificial with other Europeans countries, financial products intelligence, etc. These trends will hit the market have been more expensive on average in Italy and soon and banks need to be prepared to compete. this has undoubtedly led to special attention being paid to this aspect. Italians put pricing levels at the top of their criteria, and banks as well as non- Which specific initiatives have you banking players are leveraging this aspect in order implemented (or are implementing) regarding to boost interest in online financial products. In any the development of this channel and other case, even if pricing plays a key role in boosting innovative digital channels? interest it is important to work on focusing attention on all online benefits. The digitalisation of sales activity is one of BPM’s key objectives for the coming years and is part of our strategic plan. We are currently working 15% of Italian internet users have already on supporting our structure with an advanced paid with smartphone/e-wallet and 8% with digital platform that will be the backbone of our Apple Pay (highest two rates in Europe): is Italy increasingly digital organisation. We want to specifically ahead in the innovative means of offer our customers an advanced omnichannel payment field? How would you explain Apple customer experience, together with a better Pay’s rate (banking offers or iPhone equipment quality of service. To that end we are working on rates in Italy)? both our technology and our human capital.n
39 40 Digital Channels III: internet and financial services in Europe About us
A global non-profit organisation, established in 1971 by banks and insurance companies, Efma facilitates networking between decision-makers. It provides quality insights to help banks and insurance companies make the right decisions to foster innovation and drive their transformation. Over 3,300 brands in 130 countries are Efma members.
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41 Digital Channels III Internet and financial services in Europe
October 2017
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