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Essential resources for banking executives:enter ‘Banking Reinvented’

Study shows growing gap between German customer expectations and digital banking offerings

German banking customers want a new, digital way of communicating with their bank, and banks can leverage these wishes for an increased chance for digital sales

Backbase, a leader in the field of Engagement Banking Platforms, has revealed the results of the representative study “State of Engagement Banking – What Today’s Customers Expect,” conducted by market research firm GfK. Alongside extensive findings on the spread of online banking, the study also delivers clear answers to how banks can maintain or increase the satisfaction level of their customers.

Customer needs in banking have fundamentally changed in recent years; customers are no longer satisfied with the self-services typically available to them in online banking. Instead, they want a new, digital way of truly engaging with their bank – but not all banks have responded to these evolving requirements. This has had a negative influence on customer satisfaction: just under half of the customers surveyed are generally satisfied, and there has been a shift of opinion with the other half. In fact, one fifth of customers said they are already planning to change banks. These levels of dissatisfaction and willingness to change are especially high among younger users.

“How can banks win and retain Generation-Z customers?” asked Frank Uittenbogaard, European Regional Vice President at Backbase. “The study clearly shows that these are the questions banks need to answer. It’s alarming that the dissatisfaction and plans to change are so prevalent, especially among younger people. After all, many new customers come from this age range.”

Customers want a simple, digital way to request additional banking products

As a part of the study, online banking users were asked which new digital products and services they would like. A particularly interesting point, from the upselling perspective, is that 84% of existing online banking users would like to be able to request and purchase additional banking products in a simple, digital way. This percentage is even higher in the 30-to-39 age bracket, and the proportion of those who said they found this option good or very good increases with education and income levels. But what does this mean for banks? In short, that there are significant opportunities for upsell that they are not yet leveraging. Customers want more digital offerings, but these needs are not yet being met by banks.

Customers want improved channels of support

The study also shows that a chat function is becoming increasingly important to customers who want direct help from bank employees without a long wait time. This is defined as a chat with a bank employee to provide help and answers without a long wait. As a result, banks will need to re-architect their interactions with the customer. They should first identify which transactions should involve communication between customers and bank employees, and at which touchpoints the communication methods should be simplified. It is clear that customers are open to new communication channels, and banks would do well to address this.

Customers have wide-ranging requirements that can’t be met using isolated point solutions,” said Uittenbogaard. “The goal must be to connect bank employees with customers, provide first-class digital experiences, and become a bank that people love. And the only way to achieve that is with a technological leap forward onto an engagement banking platform.

Frank Uittenbogaard, European Regional Vice President at Backbase

One app for all financial needs

Over two thirds of respondents are multi-banked, and most would like to be able to manage their current, deposit, securities, and other accounts across all their banks using a single app. In other words, customers want one app where they can find all of their digital offerings. This underscores the fact that there is huge potential for a banking app to become a one-stop-shop for all the financial needs of the end-user. If banks do not evolve their offerings to include advanced digital services, they may be faced with a serious challenge: the erosion of customer loyalty.

Software plays a key role in trustworthiness

For 96% of the study’s respondents, online banking security is the most important factor that contributes to a bank’s trustworthiness. Second in importance is a good user interface, both in the app and on desktop. Just behind that, users prioritized the stability of the banking app. With the use of the right software, all of these criteria can be addressed. As such, software quality dominates the three most important aspects of how customers judge a bank’s trustworthiness.

Banks should think seriously about whether they are able to develop software, both short term and long term, that meets the highest-quality criteria or whether it would be better to get support from a partner whose core business is software development.

Providing digital sales on one app for all financial needs is essential to becoming customer centric

The study clearly demonstrates that banks are not meeting customers’ expectations in terms of providing digitized services. We live in the platform age, where banking consumers increasingly expect a Netflix/Amazon/Uber-like experience from their banks. They want to request the right banking products digitally, anytime and anywhere, with the right support through the channels they choose.

The good news is that banks that make it easy for their customers to buy their products and conclude contracts online can be successful at upselling,” added Uittenbogaard. “Nevertheless, the list of customer requirements is long. Banks should look at adopting an engagement banking platform in order to meet customer requirements quickly. Solutions that will only be implemented in three years’ time are generating dissatisfied customers today.

Frank Uittenbogaard, European Regional Vice President at Backbase

Methodology and quota system

For the representative study “State of Engagement Banking – What Today’s Customers Expect,” a collaboration between Backbase and GfK, a total of 2,017 men and women aged in Germany from 18 to 74 were surveyed. The base population in this segment is about 58,432,000. The people were selected from the GfK SE “NiceQuest” panel. The quota system was applied to characteristics including sex, age, region, size of town, size of household, and education level of the head of the household. The survey was conducted using a structured questionnaire by CAWI (Computer Assisted Web Interview) between the 9th and the 19th of September, 2021.