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The digital transformation, or “disruption”, presents a true challenge for the banking and insurance sectors. In this two-part series dedicated to the financial industry, we’ll look at market trends and provide several options to help financial professionals respond to this challenge using digital analytics.

Numerous factors play a part in digital transformation, making it unavoidable and thus pushing traditional banks and insurance companies up against a wall. The reasons for this are as follows.

 

The “big data” effect

Not a day goes by without an article, tweet, or infographic on the topic of big data. Banks, like insurance companies, are directly concerned. As customers go into local branches, call their advisors, log in to their online accounts, and use their bank cards, many different points of contact are being created, allowing for a considerable volume of data to be collected. Banks already use this data to develop and optimise their business, and this practice is becoming more and more common. The potential is enormous: With this data, banks and insurance groups can identify customer needs, define high-risk client profiles, detect fraudulent activities, improve the user experience, and much more.

 

The digitisation of customer relationships

One in every two Internet users visits his or her bank’s website at least once a month – a growing trend that is even more pronounced if we focus in on the highest socio-professional categories (according to a study from Médiamétrie). In parallel, networks of brick-and-mortar banks are announcing they will downsize in the coming years. Evolving from a system of traditional distribution to online distribution is about two issues: reducing costs and ensuring customer satisfaction.

 

Mobile banking is about to explode

We’ve seen the arrival of “Simple” in the United States, “Hello” and “Soon” in France, “Mondo” and “Atom” in the UK, “Number26” in Germany… Alongside traditional banks and online banks, new-generation banks are appearing, and they’re designed to be used via mobile phones or tablets. In its “Mobile Banking 2015” report, KPMG cites 0.8 billion mobile banking users in 2014. This impressive level of adoption is expected to continue to progress rapidly in the coming years, with a projection of 1.8 billion users globally in 2019.

> Learn more about the rise of banking and FinTech mobile apps in the UK, and how they’re being used: read the benchmark

 

Competition between pure players

The banking sector, which has until now remained largely concentrated, is witnessing the arrival of new entrants from diverse and varied backgrounds: start-ups, crowdfunding platforms, point of sale networks, etc. The big traditional leaders are facing innovative new players who are capturing customer interest and diversifying the commercial offer. And we’re seeing the same thing happening with transportation, media, retail and tourism…

This infographic, which has circulated around social networks, shows how Internet giants are coming in and overturning markets by presenting the user with a simple and innovative offer, one that is competitive and perfectly adapted to his or her needs.

 

Digital Transformation of sectors

 

“Digitisation will change the traditional retail-banking business model, in some cases radically. The good news is that there is plenty of upside awaiting those European banks willing to embrace it. The bad news is that change is coming whether or not banks are ready.”

Source: McKinsey, “The rise of the digital bank”, July 2014

 

Digitisation is well on its way to transforming the traditional banking sector. Customer behaviour is evolving, and in turn, marketing must also change. Offering an innovative and high-quality user experience has become the top priority in order to remain competitive.

 

In the next article, we will learn how to navigate this change in a very concrete fashion using digital analytics. In the meantime, you can find some inspiration in the best practices discussed in this interview with Benjamin Mercier, Digital Analytics VP at Barclays Bank. Be sure to also check out our latest customer case study on Prêt d’Union, an online peer-to-peer lending platform:





READ THE CASE STUDY



Author

Marketing Project Manager - At AT Internet, Caroline is developing a new, verticalised, high value-added approach to working with customers. She creates sales tools, and builds and trains teams to help put this new approach in place. Her obsession? Understanding the customer and market trends. Having fallen into the digital world in the 2000s, Caroline has worked in start-up and web agency environments, as well as in the software industry, where her mission was to make products and services attractive for customers.

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