A new report from Efma and Misys finds that digital banking services are currently falling short of customer expectation and failing to boost profitability.
Despite developments in digital infrastructure and two decades of investment, many banks have yet to reach their goal of being able to conduct virtually all banking services via digital channels, according to a new report from Efma and Misys.
Currently one in five banks perform less than 1% of sales via digital channels, while only 12% consider digital channels as the best customer acquisition source. Around 40% of customer acquisition is still done via physical branches, while word of mouth, brand reputation and advertising campaigns were named as other top sources.
“With the rise of the internet and connected devices, the industry has been prophesying the demise of traditional banking for almost a quarter of a century,” said Mark Yamin-Ali, retail banking solution lead at Misys. “Yet today, many institutions remain poorly equipped to keep pace, let alone take advantage of digital banking.”
The report also highlights that adopting digital-first core systems and infrastructure is no longer a choice for just the digitally savvy, but an imperative step for all. It provides an insight into the opportunities for banks to harness online and mobile channels to better serve customers and boost profitability.
According to the report, the number of retail banks performing more than 10% of sales via digital channels is expected to rise from 13% in 2015 to 75% by 2018.
Findings suggest that not only will banks enhance existing digital channels, but they will also turn to new technologies, such as smart watches and wearables to better balance customer experience and sales efforts. For example, 82% of bank executives believe smart watches will facilitate financial transactions in the future, while a recent Misys poll of retail bankers showed that 37% plan to adopt wearables within the next 18 months.
“Today’s consumers are tech-savvy, connected 24/7, social and impatient, so if banks are not providing a service on a par with the likes of Google, Uber or Amazon, the customer feels let down,” said Mark Yamin-Ali, retail banking solution lead at Misys. “Our experience shows that banks are aware of the technology solutions that can support improved customer engagement, leading to greater cross-sell and acquisition via digital. As this issue moves up the agenda from a ‘nice to have’ to an imperative to conduct business, we are seeing more institutions engage in discussions about how to deliver digital, customer-driven sales.”
The full report can be downloaded from here
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