Banks in Europe and 3rd Millenium technologies
15 May 2001
Novametrie, in partnership with Cap Gemini Ernst & Young, Compaq and Microsoft, has interviewed more than 45 opinion leaders and 1000 European customers on the topic of the impact of new information and communication technologies on the banking business and relationships at the start of this 3rd Millenium.
Banks have come out of the turmoil with relief.
One cannot help being stricken by the intensity of the changes which occured within the past 18 months : at the end of 1999, it seemed that the traditional banking model could burst into pieces under the force of new entrants, who mainly based themselves on Internet in order to massively attract customers discontented with their traditional banking relationship. The frenzy of financial markets on high technology stocks was contributing to the institutional players’ concern, making them fear that their supremacy would be questionned.
In 2001, the trend reversed : quickly, traditional banks integrated the new technologies into their multi-channel distribution strategy, technological stocks collapsed, and even though online trading has been relatively successful, the stand-alone internet bank did not assert itself anywhere. As a consequence, bankers modestly show a regained serenity, because their customers, in spite of the profusion of offers on internet and elsewhere, have globally remained loyal to them.
In Europe, only 16% of the interviewees would change their bank for a stand-alone internet bank, out of which 25% have already done so; in France, these rates fall respectively to 8 and 1%.
Customers want close banking relationship. and a distant bank !
The development potential of on-line financial services is promising. Their rate of use is rapidly progressing (despite the resistance, caused by the minitel to Internet in France) and on the whole the image of new technologies seems to be positively perceived by customers : time savings for % of the interviewed Europeans, practicality, improvement of the range of products and services, freedom and increase of choice, are the perceived advantages of a distant relationship over direct contact in a branch.
Paradoxically, 76% of Europeans consider that the proximity in a branch is the ideal type of relationship with their bank : this plebiscite for the traditional network is surprising considering the efforts displayed by banks in order to direct their customers towards distant distribution channels.
This apparent contradiction will disappear with time : within five to ten years, the diffusion of new technologies will be such that these channels will no longer be competing with each other, as they do today, but will become complementary, each one with its own specificity. To quote an interviewed leader, customers await a “technological proximity bank” or “a long distant proximity”.
New technologies considerably reduce the cost of banking transactions for current account operations, which undoubtly opens the way to a certain model of on-line bank. But in order to fulfil the more complex customer needs, the contribution of a specialised expert will remain irreplaceable, and will continue to constitute the strength of traditional banks.
It is thus in the fields of service quality and advice, recurrent concerns of institutional players which have not, to this day, found satisfactory solutions, that banking competition takes and will take place in the years to come : will institutional players manage to make better use of the skills of their sales force ? Will the on-line financial services providers manage to provide higher value added operations ? The aspect of the future European banking area depends on the answers to these questions, far more focused on the issue of valorization of human resources than that of technologies.
Which banking technologies will stand out in the future ?
None would call into question the primary role which will keep cash dispensing machines (whose functionnalities could still be largely improved), the telephone, call centers or Internet as pivots of the distant banking relationship complementaing the branch advisor. Even though WAP was a flop, UMTS should mark a second determining phase for the deployment of the mobile telephone in the banking offer.
Things are not as clear for the electronic purse, which is more popular with its promoters than with potential customers, for visio-advice, which is widely talked about even though no-one has seen it yet, for digital television if children accept to move over to allow their parents to manage their banking operations..
It remains to be seen to what extent these technologies will be aimed at a mass market, or will be dedicated to niches composed of stressed technology aficionados, whose lives are contained in a Personal Digital Assistant (naturally connected to a mobile telephone).
Banking technologies do not abolish borders.
Internet and mobile telephone, to cite only these two examples, ignore borders; applied to the bank, one could imagine that, at least on the Old continent, their deployment would lead to a uniform paneuropean offer directed at a new type of consumer, himself European.
We are far from this : the banking markets remain extremely nationally rooted, likely because of restrictive regulations and varying tax treatments. Moreover, it rather seems that the new technologies are not structuring in the recomposition of the European banking landscape : far more quickly, mergers and takeovers, wether friendly or not, will lead to the emergence of world-wide banks, acting in Europe through physical distribution channels.
Once these movements are completed, a European financial services offer will be able to be deployed by all the distribution channels, including the technological distant bank. At that time, nothing will prevent the birth of a European consumer, which is still today only in conception.
About Cap Gemini Ernst & Young
Cap Gemini Ernst & Young is one of the largest management and IT consulting firms in the world. The company offers management and IT consulting services, systems integration, and technology development, design and outsourcing capabilities on a global scale to help businesses continue to implement growth strategies and leverage technology in the new economy. The organization employs about 60,000 people worldwide and reports global revenues of about 8.5 billion euros (2000 pro forma).
More information about individual service lines, offices and research is available at www.cgey.com
Press information: Philippe Guichardaz, Tel: +33 (1) 47 54 50 45, Email: phguicha@capgemini.fr
About Compaq
Compaq Computer Corporation, a Fortune Global 100 company, is a leading global provider of technology and solutions. Compaq designs, develops, manufactures and markets hardware, software, solutions, and services, including industry-leading enterprise computing solutions, fault-tolerant business-critical solutions, and communications products, commercial desktop and portable products, and consumer PCs that are sold in more than 200 countries. Information on Compaq and its products and services is available at http://www.compaq.com.
Press information : Veronique Chicoix, Tel : +33 (1) 41 33 40 51, Email : veronique.chicoix@compaq.com
About Microsoft
Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and Internet technologies for personal and business computing. The company offers a wide range of products and services designed to empower people through great software -- any time, any place and on any device.
Microsoft is a registered trademark of Microsoft Corp. in the United States and/or other countries.
The names of actual companies and products mentioned herein may be the trademarks of their respective owners.
Press information : Aude Fouquier (Grayling), Tel : +33 (1) 47 31 37 12, Email : a.fouquier@grayling.fr
Learn more at http://www.microsoft.com/france/ privileges/solutions/crm.asp
About Novamétrie
NOVAMETRIE is a customer study firm specialised in media and new technologies. It proposes holistic, multi-disciplinary, cross-functional methodologies mixing both qualitative and quantitative approach.
Press information: Emmanuelle Patry, Tel: +33 (1) 44 43 54 45, Email: e-patry@novametrie.com
Learn more at www.novametrie.com
