Retail banks need to adapt to new customer service digital strategies or risk losing to non-financial competitors, according to a recent report by Temenos, a provider of software for financial services.
Titled 'Future Factors' and conducted by The Economist Intelligence Unit, the report surveyed 242 senior retail banking executives globally to gauge views on how the industry is likely to evolve in the years leading up to 2020.
The survey found that changing customer behaviours will be the second biggest factor, after regulation, affecting the retail banking sector in future. Banks fear that customers will soon defect to new competitors who are coming from outside the traditional banking industry including retailers and telcos (46 percent) and payment providers such as PayPal (22 percent).
Banks are also aware of the value of new technology, with 30 percent of them claiming that new technology will have the biggest impact on retail banking in future. However, only a third believe that the industry is ready to fully embrace new technology, with cost in terms of investment being cited a major hindrance to adoption.
"In the face of growing competition, banks will need to make their operations much more efficient and at the same time invest in the capabilities to enhance customer service, particularly across digital channels," said Ben Robinson, chief marketing officer of Temenos. He added that banks should leverage insights derived from analytics to tailor products to individual needs as well as leverage transactional data to help customers make better purchasing decisions.