The Digital Customer experience studies the level of digitalization of the products and services offered, by testing available digital customer contact channels and completing customer journeys (current account, bank card subscription and money transfers).
Retail banking in France is facing multiple challenges
Economic: a persisting low interest rate environment generated strong impact on the revenue model of retail banks that needs transformation and new source of income for maintaining profitability.
Regulatory: new EU rules and French policies aim to make it easier for customers to switch current accounts from one retail bank to another, potentially impacting rivalry among retail bankers and increasing costs for retaining customers.
Competition: new entrants are emerging on the market including digitally-focused players and mobile-first neo-banks, challenging traditional actors in terms of delivered banking experience and pricing model.
Examples of start-ups are Ferratum bank, providing muli-currencies account free of charge, N26, a German mobile bank, Compte Nickel, a French neo-bank distributed by tobacco stores, Revolut, a multi-currency account provider and Morning, a collaborative bank.
In addition to start-ups, new banks are also created or announced by telecom operators (Orange and SFR), retailers (Carrefour with C-Zam, Leclerc) and Insurance companies (AXA, Allianz and Macif).
Digital transformation challenges: in its report “Assessment of Risks to the French financial system – Dec 2016”, the ‘Banque de France’ and the ‘Autorité de contrôle prudentiel et de résolution (ACPR)’ highlight the strategic, operational and workforce-related risks for traditional actors linked to the digital transformation of their business models.
In this context, a superior Digital Customer Experience is a critical asset for a retail bank, with impact on customer acquisition and retention.
Observation 1 –Challenged by digitally-focused new entrants, traditional retail bankers are demonstrating very different positioning in terms of digital services offered to prospects and customers.
French people are historically faithful to their banks. It has played a big role in safeguarding the traditional banks positions from the new online players during several years. However, the churn rate has doubled over the last 3 years (1) to peak at 4,8% last year. Last regulatory evolutions (Macron Law, PSD2) will likely strengthen this evolution. Moreover, in 2014, 4 to 5 respondents out of 10 declared themselves ready to subscribe to an online bank offer, against 3 out of 10 in 2009.
Traditional banks recognize this new threat and have initiated their digital transformation. They are increasingly digitalizing the customer journey. Relatively less digitalized journeys only consist in displaying product information on a website, while a most digitalized journey offers a subscription fully on line.
By testing the level of digitalization of 7 banking products, we found that the traditional banks are still lagging behind online banks. Neo-banks have the best scores, mostly due to more limited product offering. The gap between neo-banks and other banks is even bigger for mobile app-based journeys. The weakness of traditional and online banks on mobile creates a sweet spot for new entrants and explains the sudden appearance of mobile only banks.
We have also tested 23 chosen digital services, including real-time update of current account balance, modification of credit card ceilings and categorization of balance movements.
N26 delivers 16 services out of the 23 checked. It proves that innovation is possible in core services for retail bank. The limited number of services proposed by traditional banks enables potentially profitable initiatives like Orange bank (see our article “the new standards of user experience in mobile banking”).
Current accounts are not historically the main profitability source of retail banks. With new entrants that offer current accounts and payment cards for free, traditional banks are not incentivized to actively address potential new customers. However, current account might be a trojan horse for more profitable products that can also be addressed by neo-banks. For instance, Atom bank collected £ 500 million in deposit and provided loans for the same amount in less than one year (2) with an offer fully digitalized.
Observation 2 – The mix of digital communication channels is a differentiating factor between traditional actors (stretch approach) and the digitally-focused new entrants (fit approach)
We have tested 12 digital communication channels for each bank:
Chat, call-back, email, Video conference and click-to-call as a prospect
Chat, call-back, email, Video conference and click-to-call as a client
Video conferencing and Click-To-Call are an advanced digital communication means which is actively used by Mbank in Poland and a French telecom operator Free. However, the French banks are not actively offering this product, meaning that even if it is available it is not easily accessible.
It is interesting to observe that the traditional banks have opened in average 4.8 different communication channels against only 4 for online banks and 3,3 for neo-banks. In addition, for traditional banks these channels are more reliable and reactive than for online banks (3) and neo-banks. However, traditional banks often redirect prospects or clients to other channels, mainly web pages or clients’ personal advisor, without answering the questions. Below, the results for twitter as one example of the 12 channels tested.
Observation 3 –The performance varies largely among traditional actors in terms of digital customer journey. Some traditional banks are offering a more optimized journey than certain on-line banks. Neo banks, with a smaller offering, generally provide the best digital experience.
Dozens of current accounts have been opened in 23 banks by D-Rating analysts through the most digital media available. Bank cards were obtained and money was transferred to third party through web portals and mobile apps.
Here are some of the results of the subscribing to a current account and bank card journey. We extracted 29 criteria from this journey that feed the digital user experience index. One of them is the signature method: online (web-based or mobile app-based), paper mail or in a branch. 4 banks ask their prospects to sign current account contracts in their branches. Only one online bank (ING Direct) requests paper mail. Surprisingly, Crédit Agricole asks future customers both digital signature and a paper-based one.
The journey starts from the banks’ website and ends as soon as the bank card is activated.
The journey is, in average, 14 days long for traditional banks, compared with only 10 working days for online banks. Some neo-banks managed to decrease this delay to dozens of minutes, However the customer is required to go to their points of sales to complete the journey.
During these journeys, we have counted the number of fields to be completed online (Web or mobile app, mandatory or non-mandatory) and on paper (5). Again, online banks managed to propose improved subscription process compared to traditional banks, with 29% less fields to be completed. But neo-banks went one step further with half as many number of fields.
Also, opening a bank account requires to provide supporting documents. Traditional banks ask in average 5.2 such documents, online banks 4.7 and neo-banks only 1.7.
Simplifying processes, automating tasks and being customer centric are key abilities in the digital era. Bank account subscription is often the most digitalized journey proposed by traditional banks. A large proportion of them invested in this digitalization with a result that seems fragile compared to neo-banks achievements. Those abilities cannot be easily acquired.
After taking the industry to a new level of digitalization at the beginning of the years 2010, online banks stopped developing further and left a room for neo-banks to create what may be the first real disruption in the retail banking industry: Providing a current account and a bank card for free in less than 20 minutes.
The Digital Customer Experience differs massively for different retail banking players. Such difference can have an impact on the overall financial performance of the banks on the medium and long term. The first expected impact is related to client retention and acquisition.
N26 finishes first with a high level of digitalization and very effective journeys but a lower score regarding its communication channels. The first bank with a complete offering is Boursorama, closely followed by BNP Paribas, whose digital communication channels are very performing.
Customer Experience is one of the most important topics concerning the appraisal of digital performance and needs to be regularly re-evaluated in the context of a fast changing competitive environment. D-Rating takes into account 3 other complementary topics for delivering the full rating of Digital Performance.
The full report includes the grades of all banks on the 236 criteria, 2 days of restitution and explanation support and videos of digital customer journeys. For more information on our analysis “Digital User Experience of French Retail banking,”, please contact us firstname.lastname@example.org.
Digital User Experience is the second building block to analyze overall digitalization of the French retail banking industry. The first one, Digital Footprint, studied 19 French and 3 European banks according to their relative impact on web, mobile app and social networks.
The present analysis includes 21 banks (6). 236 criteria were processed to qualify the level of offer digitalization, available digital customer contact channels and customer journeys (current account and bank card subscription and money transfers).
Offer digitalization section is based on information displayed by banks’ websites and mobile apps, interviews and tests realized by D-Rating analysts. Customer channels section is based on tests done in June.
Bain & Co study on 15 000 customers, 2016
Tests realized in June 2017 based on 4 questions and 3 trials per question in case of unavailability
Delay calculated on working days based on 2 tests and corrected if atypical event happened (for instance due to the personal situation of the testers).
Banks requiring signature in a branch are not included in this criterium
We decided not to include LCL and Caisse d’Epargne in the final results, considering we could not display a fair image as we could not test the existing online subscription processes. e-LCL was temporary closed in June 2017 for maintenance. We were unable to address Caisse d’Epargne contraints for opening a current account, since they asked new customers to transfer their main income payment directly on the newly created current account.