FinTechCube benchmark study: “Banks lack a customer focus”
30. January 2017
What is the state of digitization in the German banking sector? In order to answer this question, FinTechCube carried out the benchmark study “Digital Transformation of Banks”. More than 30 banks and around 200 private customers were surveyed for this. In this interview, Gregor Puchalla, CEO of FinTechCube, presents the key findings of the study.
In your view, what is the key finding of the study?
The benchmark study clearly showed that banks are struggling with digitization. And they regard their own progress with the digital transformation very critically. Although the importance of the digital transformation and the need to take the right steps now is generally recognized, they are falling down when it comes to execution. The decision makers who were surveyed for the study rate their own digital progress in most areas only as low to medium and that gives a clear message.
Why are banks struggling so much with digitization?
Like so many other companies, they are also mainly grappling with internal problems. Their employees are often the biggest stumbling blocks. They defend the company’s existing structures as they are afraid of change or loss of influence. At the same time, they lack people with the necessary expertise to drive the digital transformation forward. And, last but not least, innovation also requires a change in mindset. Speed and flexibility instead of control, and new business models and digital services must be developed and tested in line with the principle of “fail fast, fail cheap”. But banks do not yet have sufficient tolerance to accept any failed attempts.
According to the study, many banks see the solution to their problems in cooperating with fintechs Is that finding surprising?
Not necessarily surprising. We have already observed in the last few months that an increasing number of established financial institutions are buying fintechs and/or integrating their services into their offer. But what is surprising is how clearly the decision makers we surveyed declared themselves to be in favor of cooperations. 95 percent are convinced that a cooperation will be helpful for their bank. And 60 percent are already working with fintechs. And rightly so, as the survey also showed that banks’ digital services have significantly improved through cooperations. Cooperating with fintechs is also certainly a good way of moving forward with the digital transformation. But that will not solve the banks’ problems on its own. Because banks are now often ignoring their customers when digitizing.
In what way are they “ignoring their customers”?
Evidently the banks have not yet taken their customers’ needs sufficiently into consideration. For example, the study showed that around half of private customers would also like more cooperation with fintechs. They want digital services mainly in the fields of e-commerce and crowdfunding/crowdinvesting, but also in P2P payment and blockchain. But it is precisely in these areas where there has been little fintech cooperation to date. A significant success factor for digitization is a focus on the user and/or the customer. Only those ideas that give users real added value should be executed. This way of thinking is apparently not yet embedded in the majority of banks.
What do you suggest the banks do?
The banks should urgently improve the intercommunication with their customers, gather feedback, and create more offers for interaction. They should also actively communicate that they are cooperating with fintechs and offering digital services – especially to the target group aged under 50. Because the majority of customers have no idea that their bank is cooperating with startups. At the same time, it is these very customers who will rate such cooperation very positively. This marketing benefit has not yet been exploited by the majority of banks.
Dear Gregor, thank you very much for the interview!