Retail banks are struggling to deliver customer demands for more comprehensive and personalised banking, according to the World Retail Banking Report (WRBR) published today by Capgemini and Efma.

This year’s edition featured data from a global survey of more than 7,900 retail banking customers in 20 countries, along with an executive survey conducted among more than 50 senior banking executives across 30 markets.

It found that three quarters of customers currently use at least one financial product from a BigTech, with the top three reasons they turn to financial products from non-traditional players being lower costs (70 per cent), ease of use (68 per cent) and faster service (54 per cent).

Of customers likely to switch their primary bank in the next 12 months, more than 80 per cent are currently using payments, cards, or bank account products from BigTechs and challenger banks, or are likely to do so in three years.

The report found that adoption of Open Banking has been sluggish, with only a third of banking executives saying they have effectively implemented it.

Despite this, Capgemini and Efma suggested that Open Banking is evolving to become ‘Open X’, where banks and new non-traditional players join forces to deliver banking services that integrate with digital experiences in other parts of customers’ lives.

“In an era of rising consumer expectations, banks are challenged to offer their customers a consistent engaging experience across all channels - branch, web and mobile - and evolve from the Open Banking approach towards an Open X mindset, where banks and new non-traditional players join forces to deliver banking services that integrate with digital experiences,” said Anirban Bose, chief executive of Capgemini’s Financial Services Strategic Business Unit.

“Banks that identify their top capabilities and then seek partnerships with FinTechs and other business sectors to enhance their offerings in other areas will be the most successful.”

Vincent Bastid, secretary general of Efma, added: “Even though open banking adoption has been somewhat slow, it and its evolution to Open X are the best ways forward for banks to compete in the increasingly crowded and diverse financial services landscape.”

Customers are reporting low positive experiences across many banking interactions, with loan and mortgage applications and problem resolution identified as the highest friction (69.3 per cent for mortgage applications and 63.7 per cent for problem resolution) and lowest positive experiences (37.7 per cent for mortgage applications and 40.3 per cent for problem resolution.)

Customers reported lower friction but also lower positive experience in the initial stages of the banking relationship, such as account opening and information gathering, likely due to lack of omnichannel solutions. For example, a majority of Generation Y customers (71.9 per cent) considered mobile apps as an important banking channel, but only 32.9 per cent reported a positive experience in this channel.

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