In recent months, consumer behavior in banking has changed significantly. According to the McKinsey firm, the coronavirus crisis has accelerated the conversion of customers to new distribution channels, forcing banks to strongly accelerate their digital transformation to demonstrate greater flexibility and agility. From now on, establishments must concentrate their efforts and investments on 5 major projects, centered around user experience and data management.
Offset the accelerated closure of physical assets thanks to digital
The majority of banks face the closure of their physical assets, such as ATMs or local bank branches. Recent examples illustrate this perfectly, such as rationalization between Société Générale and Crédit du Nord, which is accompanied by a reduction in the number of branches, dropping from 2,100 branches at the end of 2020 to around 1,500 at the end of 2025.
These closures are part of an effort to reduce operational costs and boost digital transformation. The adoption of online banking and neobanks is strongly encouraged, in particular by clients requiring a fully harmonized, fluid and personalized banking experience across all channels, in particular digital.
Keep the human.
While French banks are already facing many challenges, there is one that brings an additional level of complexity: maintaining and improving, in parallel with rapid digitalization, the physical relationship between banks and customers. Pandemic or not, many people remain attached to the relationship they have with their advisor and expect real added value. As a result, banks are trying to adapt, by developing additional services such as ” video-banking “. These banking meetings via videoconference are gradually attracting French establishments and their customers.
For banks, maintaining the physical relationship is also an issue in terms of data management. It is crucial that this “physical” data is taken into account in the customer journey along with the “digital” data, in order to guarantee the best possible experience. This will only be possible if the banks finally adopt a real omnichannel strategy.
Invest more in omnichannel … so as not to go bankrupt
Traditional so-called “360 ° customer vision” solutions do not take into account the events and interactions that take place on digital channels. As a result, they need to be quickly modernized and improved, with the majority of banking services now available online since the start of the pandemic. Leveraging analytics, the most advanced players in the market integrate data from across channels and are able to detect and respond to issues in near real time, or even anticipate them – all while accentuating their lead over their counterparts who lag behind and manage each channel as an individual silo.
Facing the rise of Big Tech
In today’s banking, it’s not just where customers put their money that matters, but increasingly, the ability to leverage and value their data. The players in the “Big Tech” sector such as Google, Amazon, Apple, Baidu or even the Chinese Tencent, have understood this well and have experienced significant growth thanks to the monetization of the latter. Recent innovations, such as Apple’s new credit card or Google current accounts, not to mention banking partnerships like GooglePay or ApplePay, represent a digital offer that is certainly basic, but very attractive while generating an immense potential of data to be exploited for these companies.
This approach, consisting in offering limited banking services (with little or no credit, for example) allows the control of banking regulators to be minimized but provides a great potential for monetizing the data captured, giving a new induced advantage for these “Big Tech ”. Faced with this exponential competition, banks will have to improve the user experience they offer in order to keep up with Big Tech.
More intervention from regulators
The global financial crisis linked to the pandemic has had and will have such an economic impact that it requires more intervention from regulators and supervisors in order to preserve access to capital and liquidity. To do this, financial services are now expected to be ready to expose all of their data to regulators, “on demand”, in a context of recurring crises. This concerns not only data traditionally managed by risk departments, but also new data, sometimes not readily available in banking information systems, such as the number of spaces in a funded car park or in hotel rooms. This increased demand for agility, whether in terms of data management or analysis, must foster growing interactivity between organizations and regulators.
Ultimately, the health crisis has engendered many upheavals for the European banking landscape. As the financial crisis puts pressure on banks’ balance sheets, the most resilient will seek to consolidate at scale and encourage opportunities to improve their profitability, such as the merger of Spanish banks CaixaBank and Bankia, or the takeover offer of 5 billion euros placed by Intesa Sanpaolo with a view to acquiring the rival Italian bank UBI Banca. One thing is certain, this trend will have a strong impact on the market. While several scenarios are possible, the loss of competitiveness at European level due to the arrival of new financial behemoths is most likely. The question to ask is therefore the following: how will the French market fit into this European trend?