Analysis from global management consulting firm Kearney has found that 21 per cent of Europeans in 2022 never visit a bank branch and carry out their banking remotely – a figure that almost doubled in the pandemic, rising from 12 per cent in 2019.
Now in its 13th year, Kearney’s European Retail Banking Radar is an annual analysis of the pan-European banking market, leveraging survey and proprietary data from 89 banks in 21 countries across Europe.
The growth of digital channels is clear: 55 per cent of Europeans prefer to research their next bank account or card online; 49 per cent when it comes to savings and consumer finance; and 46 per cent when looking for a mortgage.
This has a notable effect on physical interactions, as 21 per cent of Europeans in 2022 declare that they never go to a bank branch and 26 per cent claim to visit a branch only once a year. However, the research also found that a small core of consumers (21 per cent) still visit a physical branch at least once a month, showing that European banks must maintain a delicate balance between investment in digital and physical channels, especially leveraging the role of their advisors.
The financial products that consumers most frequently prefer to purchase through digital channels are transactional products (48 per cent ), savings products (45 per cent ) and consumer loans (43 per cent ). However, 61 per cent of consumers would choose to sign-for mortgage products in person, showing that face-to-face advice is still important for many consumers, particularly for larger or more complex products. Indeed, mortgages experienced the most significant drop in digital preferences between 2021 and 2022, falling from 47 per cent to 39 per cent.
Despite the importance of personal interaction, the continued growth of price comparison websites and embedded finance poses a challenge to banks’ traditional role in the ecosystem, threatening both the ownership of their customer relationships and their revenue streams.
The data shows that this disintermediation may be first seen amongst middle-aged consumers. The number of 35-54 year-olds who never go to the bank has almost doubled over the course of the pandemic, with 25 per cent now completing their entire banking business through digital channels.
Simon Kent, Global and Europe, Financial Services at Kearney, comments: “Banks have already made a strong commitment to becoming digital-first – both in terms of customer interactions and daily operations. However, considering the continuous pressure on costs, they need to carefully prioritise their digital investments, understanding which part of the customer journey should be fully digital across all channels.
“The role of banking professional as an advisor is important to many consumers, so offers a chief advantage over the digitally native neobanks. Here retail banks have the benefit of experience, so can offer the best of hybrid digital-physical channels.”