February 4, 2016
The future of banking technology & strategy continues to be determined by the dynamic changes in the economy, new regulations and advances in technology. It is crucial for financial institutions to modernize their systems, capabilities and strategy to deliver enhanced financial services and solutions to sustain in a highly competitive market. To improve and maintain customer satisfaction, banks and financial institutions need to make investments across a variety of technological platforms such as online, mobile and social media.
European banks and financial institutions are investing heavily across various technology platforms to incorporate technology and to provide digitized solutions. It has been observed that traditional banks usually deploy both proprietary technology and licensed technology when delivering consumer services. On the contrary, the emerging digital-only banks build in-house technology in a majority of cases.
In 2015, European banks spent around 110 billion USD for IT implementation and 16% of this amount was allocated to consumer banking investments.
The report highlights the trends in spending done by European banks on technology innovation in the banking space. It also talks about the increasing popularity of digital-only banks, key players in the market providing digital banking services, latest technology and consumer trends and government regulations in the digital banking space.
The IT spending by banks for consumer banking is largely focused on digital platform simplification, mobile payments services and social media data analytics.
The investment in the consumer banking technology from traditional banks will be driven by the rise of the new digital-only banks segment which aims at redefining the way banks interact with their customers through technology.
The digital only banks are financial institutions that provide end-to-end banking services through digital platforms; it is different from online banking. Online banking is an online facility provided by banks or financial institutions for transactional and other banking services.
It is estimated that digital banks have potential to increase revenues by 30% when compared to traditional banking services. It is estimated that the digital bank sector (mainly mobile banking) in Europe would grow at a CAGR of 19% through 2015-2018.
Key market players in digital banking space are Atom, Fidor Bank, Mondo Bank, Number26, Osper, Smile.co and others.
Most of the key players in the digital banking space are concentrated in the UK and German markets in Europe. It is an upcoming industry and is expected to grow significantly in the near future in other European regions as well.
It has been observed that the Gen Y population in Europe is more inclined towards digital banking and online banking solutions when compared to population raging over the age of 36 years; digital banking is expected to gain popularity amongst larger masses by the end of 2016.
Considering the larger interest of consumers in digital banking, banks are investing heavily in mobile security and authentication for a more secure banking experience. Banks are also adopting analytics to achieve a more personalized approach to engage with customers.
In the coming years, European banks would focus on the platformification of banking, incorporating big data analytics into practice, introduction of omnichannel platforms and explore advanced technologies to improve services offered.
- Overview of Banking Technology in Europe
- IT Spending by European Banks
- What is ‘Digital Only Banks’
- Key Market Players in theDigital Banking Space
- Consumer Trends in Banking Technology
- Latest Technology Trends in Banking Technology in Europe