Every year Capgemini produces the World Retail Banking Report, an annual report on trends and patterns that are emerging across the retail banking space. Undertaking comprehensive research across the globe, engaging some of the key leaders in the banking industry, with insights being presented in a pragmatic and easy to follow manner. The themes that have emerged during 2020/21 very much centre on pandemic-fuelled innovation, the growth of ecosystems in enhancing banking offers, and the increasing importance of channels in customer engagement.
Top 6 Messages from the report this year
- The continued low interest rate environment creates challenges on revenue generation for the industry. The need to diversify out of Net Interest Income is now key to driving sustainable growth across the sector. Elements of fee-based income, or examination of an API banking strategy are now being pushed more proactively
- Cost reduction and optimisation are very much front and centre for all functional areas across banking. The need to maintain and improve cost: income jaws is critical. This also includes portfolio rationalisation to cover either lines of business, or geographies that need to be divested to maintain a reasonable profitability position
- Financial Inclusion must become one of the top priorities. The pandemic, and the series of lockdowns that were required to manage the spread, has created, and amplified existing challenges across the un-banked segment. The Financial Conduct Authority (FCA) highlighted that 24 million individuals across the UK displayed at least one vulnerable characteristic during the lockdown. This number is expected to grow over the coming months. Banks need to be mindful of this trend, and examine propositions that can support from a financial assistance perspective
- Digital transformation turbocharging has been a significant trend across the overall banking industry. As providers have been unable to provide face to face services, the need to interact digitally has been the only mechanism for connecting with customers. The gap between customer expectations and what is provided is still wide, and there is still more work to be done in providing a genuine omnichannel experience. Industry commentator Chris Skinner also provides additional insights into how to navigate the transformation journey in his book Doing Digital, which is another fantastic read for getting a view on how to undertake genuine transformation, and avoid costly mistakes
- Open Banking has accelerated the Banking-as-a-service model (BaaS) as banks see this as a mechanism for driving both innovation through partnership, as well as a way of identifying new revenue streams. This is also becoming more prevalent in sectors such as lending, where embedded finance has been a very key feature of payment and lending innovation over the last 18 months
- Customer Experience – much has been written on the merits of customer centricity, with even leaders like Satya Nadella, CEO of Microsoft, now using insight models that are typically used by companies like Apple, Google, Facebook and Amazon, in driving innovation. Despite this the 2021 Retail Banking Report highlights that less than 50% of banks engage with customers to develop insights: with 70% of banks not even having the customer dynamics capability in play. Data strategies will need a re-think as more and more customer engagement will be undertaken digitally, or remotely
For more insights, research, and data on the trends mentioned above please read World Retail Banking Report
