France is slowly shifting to a mobile-only banking mindset

Efma feature

23 March 2020

Stéphane Houin, Director and expert advisor in financial services at CGI in France, spoke with Efma’s Boris Plantier about the results of a recent study by Next Content for CGI and what it revealed about France’s banking preferences.

Will French people always need a bank branch?

The study carried out by Next Content for CGI reveals that French clients still visit agency networks, but those visits are becoming less frequent over time. People need an agency on an ad hoc basis and no longer on a regular basis as before.

Clients are now looking for a form of hybrid banking services with two elements. First, easy-to-use everyday banking services (simplicity of digital use). Second, the security and human proximity through "agencies" for the most complex banking services and products. In the latter case, the advisor remains the essential link for the client and is still a key player. This is the main reason for the phenomenon of multi-banking where traditional banks are used as the main banks and the secondary bank (digital or neo-bank type) is used mainly for payment services.

In certain countries, they talk about a culture of “mobile only”. What is the situation in France?

In France we can observe a significant increase in the adoption of mobile apps since the download of mobile banking applications has increased by 10% in one year. The frequency of use of these apps is becoming interesting as well since applications are used by 3 out of 4 customers every week and is correlated in the study with a significant decline in computer usage compared to the mobile app.

However, customer autonomy has to be put in perspective with both their appetite for new technologies and the complexity of the operations they wish to carry out. Banks have invested a lot in the omnichannel relationship, that is to say the interoperability of digital processes and mobile self-care, with ever more features and banking services. But we are not yet in a “Mobile Only” world despite banks’ major investments in customer relationship programs.

What are the main criticisms that French people have about their banks?

Regarding traditional banks, the main criticism relates to the cost of banking services, and potentially the lack of transparency that remains in some cases. In the study, younger people, (18-35) along with the demanding higher professional classes, said they find banking agency services are deteriorating. We know, for example, that changes in a customer’s point of contact tend to be irritating. And overall dissatisfaction comes from a lack of diversity in the offerings, with banking products and traditional service packages which are not digital enough. Traditional banks are now bound to ensure a constant alignment of their digital services with market best practices. They have to do this in order to retain customers who have become used to getting everything, immediately, everywhere, and at a lower cost.

But when it comes to recent players such as digital banks, it is the insufficiency of human resources to respond to complex requests that is pointed out, such as mortgages or the management of anxiety-inducing situations like the theft of a means of payment or fraudulent transactions. For the youngest players like neobanks, the inadequacy of the service packages poses a problem in the long term and does not enable them to become the main bank of the client.

We have observed a surge in free banking offers. What services are French people willing to pay for?

Only less than a third of customers are ready to pay more for banking services, with a maximum amount of 3 to 5 euros per month, even if it means changing banks, to benefit from improved reception service in branches (more staff, extended hours) and better availability of advisers. This expectation is higher among young workers and could be explained by several hypotheses. In particular more constrained timetables but also a lower "generational" acceptance to have to wait for an answer or information.

As Bill Gates once said, “Banking is necessary. Banks are not.” Are the French ready to entrust their money to tech giants?

There is still weak interest for banking services provided by GAFAM, especially among young people today with only 37% declaring they are ready to entrust their money to digital giants. The platform business model of digital giants is reinforced by their control over payment and security, but as long as users do not entrust them with their income, GAFAMs can hardly offer a satisfactory level of personalization in order to be able to sell more complex products. It is also important to note that GAFAMs (and BATX) are currently relying on traditional banking players as partners to offer financial services and to gain the trust of customers. On their own, tech companies keep it to simple services such as payments (digital wallets) and do not have ambitions to enter the market alone due to regulatory complexity.

Certain banks are pursuing new sources of revenue by offering non-financial services. What do the French people think of this?

Regulations, low rates, pure players… Banks are “under attack” from all sides. They must therefore replace their platforms and create ecosystems beyond their historic function in order to create new growth potential. This seems to resonate with customers since 50% declare they are ready for “Beyond Banking” offerings, providing access to new non-financial services.

The most attractive areas pointed out to facilitate the daily life of French people are:
• Real estate (announcements, useful services in the context of a transaction, and providers for carrying out work)
• Personal services (including home help)
• Ticketing services (transport, concerts, etc.)

This diversification is now possible thanks to new regulations, in particular PSD2 which opened up banking API’s and therefore facilitated the development of complementary services thanks to open banking and new partnerships.

Keywords : Digital/Mobile channels , Non-financial services , Bank Products & Services , Offer/Pricing , Business strategy/Model , GAFA/New competitors

Geography : France