North American banks need to prepare for digital change, according to report released by Temenos

  • Survey respondents believe change is driven by customer behavior and demands (56%) as well as regulatory fines and recompense orders (cited by 56%)
  • North American bankers see mastering digital marketing and engagement as their top strategic priority
  • North American respondents recognize the importance of product agility; 49% of retail bankers citing agility as a top strategic priority

Changing customer behaviors and demands should be fueling change in the service and products retail banks are offering, according to an in-depth study released today by Temenos (SIX: TEMN), the banking software company.

The report, written by the Economist Intelligence Unit (EIU) on behalf of Temenos, explores the theme: Whose customer are you? The reality of digital banking in North America”. This regional report explores the developing situation for retail banks in North America and derives from the recently launched global report written by the EIU and supported by Temenos.

The regional report emphasizes the need for North American retail banks to further embrace change by developing their digital marketing and engagement (cited by 53% of respondents) and improving product agility (cited by 49%). The report also notes that when it comes to preparing for digital change, American banks in particular need to examine the experiences of Europe and Asia-Pacific in creating a one-stop digital journey for their customers. Those with a global footprint especially can learn from Europe’s open banking experience.

Although concerns about regulatory fines and recompense orders are higher in North America (56% vs 43% globally), there is space for banks to work together to overcome the confusing mash of federal and state regulations. The report notes that banks in North America are already beginning to come together to collaborate – a necessary effort in order to build a truly modern banking system that supports innovation.

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Renee Friedman, the editor of the report from the Economist Intelligence Unit, said: “North American banks need to be able to respond better to how their customers’ live now in terms of their digital offerings if they are to remain truly competitive against neo and challenger banks.”

Emily Steele, President – North America, Temenos, said: “Though we have strict regulations in place, nevertheless disruption is happening here in North America. We are seeing exciting developments across the region as the banking industry explores what it means to bank in a digital world. Incumbent banks are setting up digital banks alongside their own operations, challenger banks are popping up, and now we are starting to see fintechs moving to become banks themselves. Banks are awakening to the need to personalize and contextualize their digital products and services, and offer customers great customer journeys, in order to compete and remain successful.”

Key report highlights:

  • North American bankers see their current business model evolving to develop niche propositions for their clients, more so than their global counterparts do (71% vs 61%).
  • More North American bankers (87%) believe that the platformization of banking and other services through a single-entry point will steer the market than their global counterparts (78%).
  • Retail banks across North America are focusing their digital investment on cyber security (76%).
  • North American bankers consider conforming to data protection and privacy regulation to be the biggest challenge their company faces concerning data and third-party access (31% vs 21% globally).
  • North American banks’ innovation strategies are focused on investing in fintech start-ups (54%)

About the survey

The Economist Intelligence Unit surveyed 400 global banking executives about the challenges retail banks expect to face between now and 2020, and the strategies they are deploying in response. Fifty-one percent of respondents were at C-Suite level and 10% were board members. The North America report was based on 100 respondents from North America (the US and Canada) and was supplemented with in-depth interviews with senior executives from leading regional banks.