Many banks consider themselves to be leaders when it comes to digital but what is the reality? All banks have been forced to invest in digital capabilities but they have developed to a different degree. What has been lacking until now is objective data. That’s where the Deloitte Digital Banking Maturity project comes in, providing information on the position of each bank with respect to its digital offering, comparing apples to apples by taking into account the full spectrum of products and functionalities, mapped against consumer preferences in each market.
The Deloitte Digital Banking Maturity project, a joint effort of Deloitte member firms across EMEA, is a comprehensive and objective assessment of financial institutions’ digital maturity in three critical areas. A functionality review was conducted of 248 financial institutions across 38 countries. A team of 136 “mystery shoppers” opened current accounts and evaluated each bank’s internet and mobile banking channels to map their offering against 826 functionalities. In parallel, a customer survey was conducted, of more than 8,000 clients of banks in the same 38 countries, to understand customer needs and preferences for each market, and to be able to map each bank’s functionality against consumer expectation in their market. These were supplemented by an evaluation of mobile user experience (UX) by customers according to the User Experience Questionnaire (UEQ) framework.
To provide a snapshot of the results and identify some broad trends in digital banking, we compared the 5 largest banks by asset size of each country. Interesting patterns emerge in this EMEA view that allow us to make some qualified statements about what drives digital banking development.
The two key environmental factors driving digital banking maturity are:
Customer preferences. When customers expect digital and omnichannel functionality from their banks, it becomes a competitive factor, which compels banks to deliver it.
Market pressure. When other banks in the market make the move into digital and leverage it as a key differentiator or area of competence, it puts pressure on competitors to keep up.
These factors are often correlated, but not always. In some countries (e.g. Poland), market pressure has driven banks to develop digital capabilities at a faster rate than customers expect. These banks investing in their future competitiveness, under the belief that customer preferences will inevitably catch up.
While the survey focuses on digitization – the transformation of traditional banking products and services from brick-and-mortar into internet and mobile – there is growing pressure on banks to enter a new world of banking, as a result of changing regulation (mainly PSD2) and competition from FinTechs. The digital champions identified in the survey are also leaders in both Open Banking (expanding traditional banking products and services with new value-adding services, mostly delivered by third parties) and Beyond Banking (introducing non-financial value-adding services delivered by third party providers into their banking digital channels).
Maintaining a competitive edge in Open Banking and Beyond Banking will be critical to determining the digital champions of the future. PSD2 will change the dynamics of competition in many markets by removing boundaries and allowing both banks and FinTechs to compete for incumbents’ customers in their home markets. PSD2 is creating an environment where Digital champions have an opportunity enter and capture market share in neighboring markets, particularly those where there is a gap between customer expectations and incumbents’ digital capabilities. This creates a risk for incumbents that have not kept pace with their customers’ preferences for digital services.