Geneva – Temenos, the banking software company, today published a new report by The Economist Intelligence Unit (EIU) based on an analysis of over 10 million online conversations in public forums about personal finance. The report, “Customer experience: learning from online personal finance conversations”, reveals the strengths and weaknesses of traditional and challenger banks in terms of how well they are meeting customer needs. It finds challenger banks are strongly associated with financial empowerment, but also twice as likely to be associated with security and privacy concerns when compared to traditional banks.
According to the EIU report, start-up, digital-first banks and investment services have come to market promising superior customer experience and innovative services, such as budgeting apps and automated, low-cost investment tools. But traditional banks still benefit from trust, reliability and a wider range of services. And increasingly, spurred on by new digital entrants, they are investing heavily in their digital capabilities. In an earlier EIU global survey, a third (32%) of banking leaders stated that improving customer experience and engagement was their bank’s top strategic priority.
Max Chuard, Chief Executive Officer, Temenos, said: “The new report, which analyzes online conversations, reveals that in the battle for consumers, challengers and incumbent banks will need to meet customers’ demands for financial empowerment, enhanced digital experiences as well as safety and security. We see digital technology as a once-in-a-generation opportunity to deliver satisfying and secure customer experiences and generate growth for banks. With Temenos’ advanced cloud and AI technology, we serve over 3000 banks, we help challengers scale fast and incumbent banks innovate and create the hyper-personalized experiences that customers crave. With our open, microservices-based technology architecture, we allow banks to re-imagine their business models and create effective marketplaces to deliver real value to their customers. The transformative power of cloud and AI technology gives banks a fighting chance in the campaign for customer relationships, but time is of the essence.”
The analysis found that 13.7% of conversations about challenger banks included associations with concerns about safety, security or privacy, compared with only 6.7% of those about traditional banks. Discussions about “investment” have grown in frequency since 2015, and the analysis shows that 14.4% of conversations that discuss challenger banks include associations with financial empowerment capabilities such as tracking and budgeting, compared with just 2% of conversations that discuss traditional banks.
But while many consumers are turning towards disruptive fintech platforms for enriched tools and services to bolster their personal finances, traditional banks remain heavily associated with rewards and loyalty programs — one of the most discussed subjects overall. A quarter (24.9%) of conversations about traditional banks were related to credit cards or reward programs, compared to just 2.4% of those involving challengers.
The report also notes that the field of “financial services” is far bigger than before with open banking allowing third-parties to build innovative financial products and assist customers in many aspects of their financial lives. This could see fintech become ubiquitous in areas far beyond core banking services. The analysis shows incumbents and challengers are only associated with 18% of total personal finance discussions, with the rest covering everything from divorces and wills to car buying.
Jason Bates, co-founder of app-based banks Monzo and Starling, as well as 11:FS, a fintech consultancy, comments in the report: “Innovators are those who understand the ‘brutal realities’ of customers’ daily lives. We never ask customers, ‘what would you like us to build?’ because they are experts at talking about their problems and experience, not product development. Our approach to creating new digital services is to talk to customers about the issues in their daily life and then look at how you can deliver against that.” (Temenos/mc/ps)
To better understand consumer preferences when it comes to retail banking services, the EIU developed a natural language processing model to analyze over 10 million online English-language conversations about finance and banking, drawn from English-language personal finance forums on Reddit. This analysis supplemented the EIU survey results of over 300 global banking executives, conducted earlier this year.