Never before has the importance of technology been greater in financial services. Digital banking solutions and apps have made their way into everyday life across Europe.
A new study across 11 markets commissioned by Mastercard* reveals that six out of seven people use digital banking solutions at least once a month, 38% do so on a weekly or even daily basis. 63% use mobile banking apps from traditional banks and one in five (20%) already from digital-only banks.
As banking becomes increasingly digital and connected, people demand security more than ever before naming it their most important criteria for using digital banking solutions (67%). In a similar study two years ago, only 39% voted for safety and security when they were asked the same question.
On the other hand, Europeans consider convenience a little less important than two years ago (from 43% in 2017 to 33% in 2019). Nevertheless, they still think that this is the biggest advantage of digital banking solutions because they are time-saving (66%) and easy to use (65%).
Nearly two thirds (63%) also think that the demand for mobile financial solutions will increase in the future because they make transactions simple and convenient. This will require the banking industry to implement multi-factor authentication, secure applications, and other forms of security such as biometrics.
As the study shows, more than 9 in 10 Europeans believe that collaboration and partnerships are essential to spark innovation in the financial sector and more than 75% think that Mastercard is the right partner for digital players, valuing the company’s technology which is safe, secure and easy to use (28 %), its reliability as a partner (23%) and its innovative products (22%).
Over the past two years, Mastercard more than doubled its partnerships with digitised banks across the continent. Today, more than 60 digital players rely on the technological know-how from Mastercard, the global infrastructure, a world-wide network to financial institutions and the ability to deliver digital solutions. Partners range from digital-only players like Monzo, Revolut or Holvi to digital banking solutions from established banks like ING or BNP Paribas.
“The study underlines that digital banking through traditional and digital-only banks is the new normal for most Europeans. They want digital products that are easy to use and secure at the same time,” says Jason Lane, Executive Vice President, Market Development Europe at Mastercard, at Money 2020.
“We believe strongly in collaboration to bring out the best in digital innovation and are proud to be the leading partner of choice for a continuously growing number of digitised banks helping them to deliver safe and convenient digital payment solutions. Through our trusted partners we are able to provide consumers a network with the latest in digital payments security to give everyone peace of mind when using a digital payment solution.“
Customers demand more digital services from their incumbent banks
When it comes to the future of banks, a growing number of Europeans say they will consider switching to a digital bank at some point (from 49% in 2017 to 54% in 2019).
People aged between 18 and 29 are the most disloyal age group (63% considering a change). In Hungary, 28% consider changing their bank for a digital-only bank during the next 12 months, followed by Italy (20%) and the UK (18%).
The European average is 13%. At the same time – as traditional banks offer more and more digital banking products as well – an increasing number of people (39 % compared to 32 % in 2017) say that they will stay with their bank, with the Dutch and Swiss (58 % each) being the most loyal bank customers.
Almost one in ten (7%) Europeans is a client of a digital-only bank, the top 3 markets being Germany (14%), Italy (11%) and Spain (10%).
As people move towards digital banking solutions they demand similar services from their incumbent banks. The three benefits that customers look for the most are that their services are available everywhere as well as easy to use (32%), real-time cost control and transparency (25%) and more flexibility (22%).
Europeans embrace innovations enabled by the EU’s Open Banking Initiative
In September 2019, the PSD2 Open Banking initiative will come into effect in the EU. This means that apps and other third parties will be able to access information from people’s bank accounts, as well as trigger payments from them, provided that they will have been given explicit permission by the customer.
As the study shows, most people (85%) are not aware of this initiative or have little knowledge about it. Nevertheless, new digital services enabled by open banking are asked for by many Europeans: Whereas 13% already use mobile apps which track finances from multiple bank accounts, almost half of them (43%) would love to use an app to see, in one place, current/savings accounts from all the different banks.
More than a fifth (22%) would favour a service that can help them manage their money and forecast spending patterns based on analysis of all their previous spending records.
Banks are by far the most trusted source for information about managing money
With trust and security being major pillars of the Open Banking ecosystem, banks have the advantage of being – by far – the most trusted source when it comes to information about managing money.
70% of Europeans see banks as their preferred go-to source, with Bulgarians (80%), Swiss (78%) and Russians (77%) being the most trustful in the information provided by them and the British (59%) having the least confidence in them.
A third of Europeans (33%) asks friends or family members and it is especially the younger generation from 18-29 years who seek trusted financial information from their friends (44%). 21% get their information from the media, 15 % from financial advice companies and 1 out of 10 (11%) from apps and social media.
When it comes to trusting their friends, most Europeans (72%) however would not go as far as sharing their bank details with them. Only 1 in 10 (13%) said that they would do it with people in the UK trusting their friends the most (30%). The younger generation appears to be more open and trusting of their friends as 18% of those aged between 18 and 29 but only 8% of those aged between 50 and 69 would share their financial details with them.
“We see that Europeans are very much interested in connected and personalised financial services which make their banking easier and more transparent. The Open Banking initiative will help drive these innovations,” continues Lane.
“As trust is a key success factor, banks are in the pole position for providing such solutions to their customers as people trust them more than any other peer groups or institutions when it comes to managing their money. With its suite of services, Mastercard fully supports the transformation taking place in the industry as our partners ready themselves to take full advantage of the opportunities offered by Europe’s PSD2 legislation.
Our new services will make it easier for banks and third party providers to work together, enabling open banking to excel.“
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