Banks lag digital consumers

Warc, 16 July 2014

LONDON: One quarter of UK consumers would consider using a pure digital bank, a new survey has shown, but across Europe existing retail banks are investing little in their digital offer beyond enabling basic transactions.

Accenture, the consulting firm, surveyed 3,604 UK current account customers, examining perceptions and behaviours on a range of factors and found that there was a widespread appetite for digital banking – 80% went online at least once a month to interact with their banks while monthly mobile banking usage was rising steadily, to 27% of customers in 2014 compared with 21% in 2012.

And while a significant minority (25%) would use a bank with no branches or call centres and that was only accessible via laptops and mobile devices, the age group that was most keen on the idea was aged 25 to 34, where one third (33%) said they would consider using one. The least receptive group was the youngest – only 22% of 18-24 year olds thought they would use such a bank.

"The youngest, most tech-savvy-customers still value face-to-face contact as they begin their life's financial journey, whereas older customers who are further along in their work life are more open to a digital-only relationship," explained Peter Kirk, a managing director in Accenture's Financial Services group.

Separately, McKinsey, the consultancy, noted that European banks had digitised only 20% to 40% of their processes and most had relatively shallow digital offerings. It contrasted the position of banks with the rise of "self-directed" customers who were highly adapted to the online world.

"Once a credible digital-banking proposition exists, customer adoption will be breathtakingly fast and digital laggards will be left exposed," it said. "Getting digital banking right is a do-or-die challenge," it added.

The need for banks to address this issue was highlighted earlier this year in the Harvard Business Review where Wayne Busch and Juan Pedro Moreno, who head up Accenture's banking practice, warned that non-bank competitors – from supermarkets to coffee chains – were encroaching on bank territory.

"The risk for banks," they wrote, "is that new competitors will consign them to a limited role as back-office utilities, while non-banks become the new face of their customers' financial lives."

Already one fifth (21%) of UK customers would consider banking with non-bank organisations, such as an online payment-provider or post office, and 15% would consider banking with retailers if they were to offer current account services.

Data sourced from Accenture, McKinsey, Harvard Business Review; additional content by Warc staff