People, Not Products, are the Future of Banking, Finds Economist Intelligence Unit Report for Temenos

Rhea-AI Summary

A recent report by the Economist Intelligence Unit, published by Temenos (SIX:TEMN), reveals that 81% of banks aim to enhance customer experience over product differentiation in the next four years. The report indicates a significant shift towards online banking, with 27% of UK adults holding digital-only bank accounts. Key priorities for banking executives include improving customer engagement, responsible lending, and financial inclusion. The study emphasizes the need for banks to adopt a customer-centric approach as they move online, highlighting that 71% expect cash transactions to shrink drastically by 2025.

Positive

• 81% of banks prioritize customer experience over products, indicating a significant industry shift.
• 27% of UK adults now have digital-only bank accounts, a 16% growth from January 2020.
• Key banking priorities include microfinance (34%), unbanked deposits (33%), and responsible lending (32%).
• Top-performing clients achieve cost-income ratios of 26.8%, significantly better than the industry average.

Negative

• None.

• Four in five (81%) banks seek to differentiate on customer experience rather than products
• Mastering both customer experience (30.5%) and digital marketing (28.5%) are ranked as top strategic priorities for the next four years
• Survey respondents across the world are considering microfinance for entrepreneurs (34%), deposits for the unbanked (33%) and responsible lending to under-banked populations (32%) as top actions to promote financial inclusion and empowerment

GENEVA, Switzerland--(BUSINESS WIRE)-- A new report by the Economist Intelligence Unit published today by Temenos (SIX:TEMN), the banking software company, reveals that four in five bankers (81%) believe that financial institutions will seek to differentiate themselves on customer experience rather than on their products and services in the next four years. The report underscores the importance of customer experience, as changes to customer banking behavior triggered by the pandemic create long-term structural changes.

The report, titled “Demanding More”, is based on a recent global survey of 305 senior banking executives conducted by the Economist Intelligence Unit (EIU). The report highlights how financial institutions have been forced to adapt to the sudden movement of customers managing their finances online, which has proved beneficial to digital-only banks. As an example, as of January 2021, 14 million British citizens (27% of UK adults) had a digital-only bank account, representing a 16% growth from January 2020 and an increase of 3X compared to January 2019. Almost three in four (71%) global respondents expect cash to represent less than 5% of all retail transactions globally by 2025.

The shift towards online banking has highlighted the evolution of how financial institutions manage relationships and the demise of the traditional branch. Global banking executives’ top strategic priorities are all customer-focused. Improving customer experience and engagement, including personalization and intimacy, was viewed as the top strategic priority by 30%.

The report further reveals that consumers, particularly Millennials and Gen Z, are increasingly demanding that companies follow responsible business practices. This is leading to business engagement with issues that are important to consumers, such as combating climate change and promoting diversity and financial inclusion. Additionally, banking executives are prioritizing the financial empowerment of their customers. Findings show that around one in three financial institutions are considering growing microfinance for entrepreneurs (34%), deposits for unbanked populations (33%) and responsible lending to under-banked populations (32%) in the next one to three years.

Joaquin de Valenzuela Muley, SVP & Busines Line Director – Temenos Infinity, said: “Banking is a very human experience, and yet for so many, banking doesn’t happen the way we live our lives. In today’s world, the relationship financial institutions have with members or customers is more critical than ever. Banks are moving their customers from physical into digital channels and the winners will be those who can inject intimacy into those channels. Banks will need to provide a digitally-driven customer experience in assisted channels and online – offering advice, value-added services, and ‘always on’ banking, helping individuals, families, and businesses to meet their dreams and aspirations. This report showcases what should have already been obvious: banking is about the people, and the products need to reflect that.”

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About Temenos

Temenos AG (SIX: TEMN) is the world’s leader in banking software. Over 3,000 banks across the globe, including 41 of the top 50 banks, rely on Temenos to process both the daily transactions and client interactions of more than 1.2 billion banking customers. Temenos offers cloud-native, cloud-agnostic and AI-driven front office, core banking, payments and fund administration software enabling banks to deliver frictionless, omnichannel customer experiences and gain operational excellence.

Temenos software is proven to enable its top-performing clients to achieve cost-income ratios of 26.8% half the industry average and returns on equity of 29%, three times the industry average. These clients also invest 51% of their IT budget on growth and innovation versus maintenance, which is double the industry average, proving the banks’ IT investment is adding tangible value to their business.

For more information, please visit www.temenos.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210929005613/en/

Media Contacts

Jessica Wolfe & Scott Rowe

Temenos Global Public Relations

Tel: +1 610 232 2793 & +44 20 7423 3857

Email: press@temenos.com

Alistair Kellie / Ian Morris / Matt Redley / George Esmond

SEC Newgate on behalf of Temenos

Tel: +44 20 7680 6550

Email: AllNewgateTemenos@secnewgate.co.uk

Source: Temenos

FAQ

What does the recent report by Temenos reveal about banks' priorities?

The report indicates that 81% of banks are focusing on enhancing customer experience over product differentiation in the coming years.

How many UK adults have digital-only bank accounts as of January 2021?

As of January 2021, 27% of UK adults, or approximately 14 million citizens, have digital-only bank accounts.

What are the expected trends in banking transactions by 2025?

71% of banking executives believe cash will account for less than 5% of all retail transactions globally by 2025.

What actions are banks considering to promote financial inclusion?

Banks are considering microfinance for entrepreneurs (34%), deposits for the unbanked (33%), and responsible lending to under-banked populations (32%).