Study and ranking of 15 retail banks in Belgium, based on 429 indicators measuring the digitization of banks’ offering, the efficiency of contact channels and the performance of customer journeys.
The use of online banking is already established in Belgium, where 83% of the population uses uniquely or mostly online banking for daily banking operations, with 25% of banking customers considering online banking for complex operations.[1] Desktops are still the most popular (71%), however the mobile devices (including tablets) are now used by 48% of the population for daily banking operations.
Having digitally savvy customers is an opportunity for traditional banks to reduce costs but it isalso a threat as these customers could be lured by the new generation banks.
New innovative digital banks with “built-from-scratch” core systems, pan-European approach, low-cost structure and sensational fund-raising, establish new standards of banking and make customers more demanding in terms of digital features. German N26 already attracted 1 million European customers in 5 years and London based Revolut: 1,5 million! Revolut, which is currently valued at $1.7 billion [2], or N26, which recently raised investments from Tencent and Allianz[3], can be concerning for any traditional local bank.
In addition to this, retail banking faces a growing threat from digital giants like Tencent/WeChat and Amazon. While WeChat’s banking type service is currently limited to payments, Amazon offers lending to the merchants on its platform, payments by Amazon Pay and even deposit collections. In India, the delivery staff takes cash deposits at people’s houses. This is done via theCashload feature of Amazon Pay[4]. For the customers, who prefer to pay deliveries in cash, Amazon allows to save any extra cash from their purchase in their Amazon Pay account. The balance can also be used for paying utilities on the partner websites and apps.
According to a study by Accenture, by 2022, 45% of the world banking revenues will begenerated from digital, in comparison with 15% in 2017.
Are the 4 biggest Belgian banks (BNP Paribas Fortis, KBC, Belfius, ING Belgium), who together possess 58% market share [5], ready for these challenges? How is digital offering of the other smaller banks, including 1st generation online players, positioned? This is the questions we are answering with our analysis of the digital customer experience. It is divided in 2 parts:“Offers & Journeys” & “Presence & Satisfaction”. This article provides key findings related to part 1.
“Digital CX Offers & Journeys” study methodology and panel
The 2018 study is covering 13 banks and 2 payments service providers. All brands have been compared by testing features proposed online, digitization level of the banks’ products, digital contact channels and three completed journeys: account opening (with payment card), money transfer and appointment scheduling.
The study is based on 429 indicators, on which is calculated a global score “Digital CX Offers &Journeys” using a proprietary algorithm. The tests were done during June, July and August2018.
While Anytime and Revolut were fully tested and because they do not hold a banking license,their global score is not included in this report.
Key fact n°1: major traditional players embraced the digital revolution by providing a solid digital experience
N26, the German neo-bank, is leading the panel, but with a limited product offering today. Very close behind, with a full range of services, KBC/CBC is dominating the traditional and online banks. KBC/CBC offers a very wide range of features, a large share of products can be acquired fully online and their journeys are efficient.
After N26, the top 2 banks are the biggest banks of Belgium. BNP Paribas Fortis and ING Belgium, the next 2 biggest banks, also have good scores compared to the rest of the market. This phenomenon is not necessarily the case in other countries, for example in France, where the 3 biggest banks in terms of customers are 5 points below the average. In Belgium, the 3 biggest banks are 9 points above the market average.
While trying to understand the reasons for the traditional banks to be among digital leaders, wehave looked into a number of shared, collaborative platforms, like itsme and Bancontact, whichhave been created by these banks.
Key fact n°2: Joined efforts of Belgian banks are improving customer experience and protecting incumbents
An example of shared platform by the Belgian banks is the usage of eID and itsme apps for clientauthentication. The account opening via the use of one or the other system, is proposed by 50% of the Belgian banks. eID is an electronic proof of identity with which clients can carry out electronic transactions and istme is a mobile verified ID version of the eID with equal legal value online[1]. These systems allow clients to avoid filling in long forms, putting their names, addresses and other basic personal information in order to open accounts. While eID usage is more cumbersome, given that the clients have to connect their eID readers to their computers, sometimes download a 3rd party software or use only certain internet browsers which are compatible with readers, the itsme app is relatively easy to use and currently has over half a million downloads[2].
Another example of collaboration by Belgian banks are Payconiq and Bancontact, two systems which have recently declared a merger[3]. Bancontact was created in May 2017 by ING, KBC and Belfius[4] and currently has 19 participating banks[5]. The systems allow customers to purchasegoods or pay friends by scanning QR codes.
QR code payments/transfers are alternative to NFC payments. In China, for example, payment sector only holds 10% of the entire Chinese mobile transaction market[6]. The rest is dominated by WeChat Pay and Alipay, which use QR code model. Chinese customers can even buy street food by scanning the QR code which is attached to the food stand[7]. While this system is widespread in China and the Southeast Asia, it is less common in Europe[8] and as such Belgiumis indeed demonstrating leadership in the area.
With the biggest banks investing in their digital transformation and such joined efforts, theBelgian market seems less attractive for new entrants than other European countries. And newentrants (N26, Revolut, Anytime) might have a harder task to lure customers from this market.
Key fact n°3: The customer journeys to open bank accounts or to make transfers are highly digital
We have tested the account opening process without eID or itsme and found that the process is quite digital even then. From the analyzed banks in Belgium, only Argenta is asking the customers to visit their bank branches for account opening, unless the customer is switching their bank account to this bank. Four banks require sending the signed contract and documentation via post: BNP Paribas Fortis, Deutsche Bank, Crelan and Keytrade.
The average time to get a full access to a functioning bank account and a bank card in Belgium is11 days for traditional banks and 7 days for the payment solution providers: Revolut and Anytime. Online banks, Hello Bank! and Keytrade, are behind the average, with 24 days and 12 days respectively.
The Belgian banks are champions in terms of number of ID cards required for the bank account opening. They don’t require electricity bills, confirmation of address or any financial proofs and often an ID card is enough to fulfill the document requirements. This is in comparison with France, where the average number of required documents is 4,5.
Belgian banks are much more efficient than the French banks in another area as well: money transfers. In France it is normal to first add a beneficiary, then wait for 2-3 days for the bank to confirm the beneficiary, then transfer the money to the added beneficiary. Contrary to this, Belgian clients can make transfers simply by adding the IBAN of the recipient and putting the amount of money to be transferred. As a result, the average time to make a transfer in Belgium on a mobile application and web personal space is 1.5 minutes.
Key fact n°4: Proposed features by Belgian banks are still to be improved
Compared to the foreign neo-banks as well as their neighboring French banks, the Belgian banks are quite far behind in terms of richness of features provided to their customers.
We have listed 54 features and checked their existence for the banks or PSP in our coverage list.
From the traditional banks, KBC/CBC and Belfius are the leaders in terms of offered features andthey are behind only N26 which offers slightly more. Beobank and Deustche bank stay stronglybehind the competition.
Overall, the Belgian banks are not commonly proposing some advanced features for payment management such as activation of contactless payment by the client or lock/unlock of the bank card for payments, which are more often proposed by PSP-s and neo-banks. The decrease of cash-based transactions now enables banks to provide, through their portals and mobile applications, a real help for customers to manage their budget with features such as automatic categorization of expenses, automatic notification when payments done exceed a defined limit orwhen the balance of the current account goes below a defined threshold. Such features help banks create trust and loyalty.
In this area as well, with some exceptions, Belgian banks are lagging behind.
In terms of access to certain products, such as consumer credits, real estate mortgages, pension savings accounts and home insurance plans, customers can often subscribe fully online or at least launch the online process.
Key fact n°5: contact channels of banks have integrated some social networks but diversity is not yet achieved
Social media is used relatively widely with Facebook penetration at 92% and Twitter at 75%.
Understanding that the social media communications are more often practiced with the prospective clients, the channels available for the use by the existing clients remain poor.
Emails/contact forms are favorite in the market, while immediate call back, which is a widely used tool by many banks and other companies in Europe, is not used by any of the Belgian banks. Internet calls, a more recent tool, allowing to make video calls directly from the desktop of the client to the bank customer service by a click of a button, is also not used by the Belgian banks. The only pioneer in this area is KBC, which does provide this option to the customers when they book a meeting with the bank on their online portal, however, during our tests no calendar availability for the upcoming months was found to book this type of meeting.
With Belgian banks following the international trend of closing bank branches (Since 2010, the number of bank branches has been decreasing by 3,5% per year on average)[14], creating strongcontact channels will be indispensable for the banks to attract and keep their customer pool.
References
[1] https://connective.eu/itsme-your-mobile-identity-powered-by-connective/
[2] https://play.google.com/store/apps/details?id=be.bmid.itsme&hl=fr
[3] https://cdn.beobank.be/pdf/fr/Operations-courantes/App/how_to_install_FR.pdf
[4] https://www.rtbf.be/info/economie/detail_bancontact-et-payconiq-belgium-vont-fusionner?id=9877712
[5] https://cdn.beobank.be/pdf/fr/Operations-courantes/App/how_to_install_FR.pdf
[6] http://tech.sina.com.cn/i/2017-08-31/doc-ifykpzey3172677.shtml
[7] https://technode.com/2018/02/16/photo-chinas-obsession-qr-codes/
[8] https://www.economist.com/the-economist-explains/2017/11/02/why-qr-codes-are-on-the-rise
[9] https://www.cbc.be/content/dam/particulieren/f-cbc/campagne/barometre-omnicanal-201701/resultats-observatoire-cbc-les-belges-et-la-digitalisation-des-banques.pdf
[10] https://qz.com/1261837/revoluts-valuation-has-gone-to-the-moon-since-it-added-crypto-trading/
[11] https://techcrunch.com/2018/03/20/n26-raises-160-million-from-tencent-and-allianz/
[12] https://thefinancialbrand.com/74543/amazon-bank-checking-account-regulators-charter/
[13] http://en.finance.sia-partners.com/bank-branches-belgium
