Connect with us

Banking

Oracle Financial Services Global Survey Reveals Consumer Expectations for Digital Banking

Published

on

Oracle Financial Services Global Survey Reveals Consumer Expectations for Digital Banking

67 percent of consumers surveyed have made the switch to digital; increasingly open to non- bank options

Today Oracle announced the results of a new global study that delves into consumer’s sentiment, behavior and expectations around banking. Findings from The New Digital Demand in Retail Banking report shows that banking today needs to be better integrated into customers’ digital lifestyle, providing service that is instant, integrated with social platforms, and most importantly, driven by data.

To better understand the expectations and preferences of today’s customers, Oracle surveyed 5,200 respondents from 13 countries around the globe. The survey delved into four key customer banking stages with respect to digital: opening a bank account, payments and transfers, personal loans and mortgages, and personal finance management and investment services.

“Consumers have already made the switch to digital banking for its ease and convenience,” said Sonny Singh, senior vice president and general manager of Oracle’s Financial Services Global Business Unit. “While customers are generally satisfied with basic banking services, their satisfaction drops when attempting more complex transactions such as securing a loan. Banks today must provide a more seamless customer experience or run the risk of losing out to non-banking alternatives.”

The Digital Switch is Complete

The vast majority of consumers have moved from the traditional ways of banking, such as visiting physical branches, to primarily banking online, and are increasingly open to trying new digital platforms.

  • 81 percent of consumers are using digital channels to engage with their bank
  • 69 percent of respondents want their entire financial lifecycle on digital channels
  • Across all four banking stages, customers listed best rates or returns and experience as the most important considerations in today’s financial decisions
  • Consumers from India, China, Indonesia and Brazil ranked as the most open to trying new digital platforms, while the U.S. fell in middle of the pack at seventh. This look at “digital openness” suggests that banks operating in mature developed economies must capitalize on the digital banking lifestyle to win over customers

Mind the Gap: Fintechs make in-roads on traditional banks’ business

Trust, best rates or returns and experience are the top three most important factors for choosing a service provider. However, when consumers go into the banking lifecycle, the quality of rates and experience triumphs trust. The digital prowess of new non-bank options makes them an attractive alternative to traditional banks. As a result, banks are seeing an erosion in their core business. 

  • One-third of customers are looking for alternatives for personal loans and mortgages because of the unsatisfactory experience
  • More than 40 percent of customers think non-banks assist them best in their personal finance management and investment needs, indicating dissatisfaction with traditional banks in this area
  • 66 percent of customers say that experience is a major factor when choosing payment and transfer services, meaning consumer banks cannot afford to rest in this area
  • While customers between 20 and 52 prefer opening a bank account through digital channels, young consumers between 16-19 years old still prefer non-digital channels like physical branches, likely due to lack of experience, reminding banks of the importance of face-to-face assistance

Don’t Expect Brand Loyalty

With customers perceiving fintechs and non-bank options favorably, attachment to traditional banks is decreasing. To retain their current customer base, banks need to deliver value, consistency in services and a higher standard of experience that meets the expectations of today’s customers.

  • 30 percent of those who have not tried a non-bank product or platform before say they are open to trying them
  • Banks are highly trusted (65%) as a financial partner but are lacking in the other considerations, such as best rates or returns and benefits, which non-banks are highly associated with
  • Cryptocurrencies topped the list when people were asked what non-bank alternative they have not used but are most keen to try, followed by independent online personal finance and/or wealth management apps, and independent digital-only fintech banks

The future of banking is clear. Today’s banking customers have come to expect the omnichannel experience – service where and when they want it no matter what the platform is. The winners and losers will come down to those who embrace and accelerate change to serve their customers.

Banking

Take on more risk or taper? BOJ faces tough choice with REIT buying

Published

on

Take on more risk or taper? BOJ faces tough choice with REIT buying 1

By Kentaro Sugiyama and Leika Kihara

TOKYO (Reuters) – The Bank of Japan (BOJ) is under pressure to relax rules for its purchases of real-estate investment trusts (REITs) so that it can keep buying the asset at the current pace, highlighting the challenges of sustaining its massive stimulus programme.

The fate of the rules, which limit the central bank’s ownership of individual REITs to a maximum of 10%, could be discussed at the BOJ’s review of policy tools at its March 18-19 meeting, with an industry estimate putting nearly a third of its REIT holdings at close to the permissible threshold.

Given Japan’s fairly small REIT market, the BOJ may struggle to keep buying the asset unless it relaxes the ownership rule or accepts REITs with lower credit ratings, analysts say. The BOJ currently buys REITs with ratings of AA or higher.

“There’s a good chance the BOJ could tweak the rules for its REIT buying at the March review,” said Koji Ishizaki, senior credit analyst at Mizuho Securities.

The issue underscores the tricky balance the BOJ faces at the March review, where it hopes to slow risky asset purchases without stoking fears of a full-fledged withdrawal of stimulus aimed at weathering the prolonged battle with COVID-19.

As part of its stimulus programme, the BOJ buys huge amounts of assets such as exchange-traded funds and J-REITs.

It ramped up buying last March to calm markets jolted by the pandemic, and now pledges to buy at an annual pace of up to 180 billion yen ($1.68 billion).

The BOJ last year bought 114.5 billion yen worth of J-REITs, double the amount in 2019, bringing the total balance of holdings at 669.6 billion yen as of December, BOJ data showed.

The surge of its portfolio has led to the BOJ owning more than 9% for some REITs. An estimate by Mizuho Securities showed the BOJ owned more than 9% for seven out of the 23 REITs it held as of January, including Japan Excellent and Fukuoka REIT.

The BOJ did not immediately respond to a request for comment. The central bank normally does not comment on policy, besides public speeches and briefings by its board members.

BOJ Governor Haruhiko Kuroda has said the review won’t lead to a tightening of monetary policy.

But many BOJ officials are wary of relaxing rules for an unorthodox programme like J-REIT purchases, which critics say distorts prices and exposes the bank’s balance sheet to risk.

“Unless markets are under huge stress, it’s hard to relax the rules,” said an official familiar with the BOJ’s thinking.

($1 = 107.0200 yen)

(Reporting by Kentaro Sugiyama and Leika Kihara; Editing by Muralikumar Anantharaman)

Continue Reading

Banking

German watchdog puts Greensill Bank on hold due to risk concerns

Published

on

German watchdog puts Greensill Bank on hold due to risk concerns 2

By Tom Sims and Tom Bergin

FRANKFURT/LONDON (Reuters) – Germany’s financial watchdog warned of “an imminent risk” that Greensill Bank would become over-indebted on Wednesday as it imposed a moratorium on the lender making disposals or payments.

BaFin’s move is another blow to the bank’s owner, Greensill Capital, which said on Tuesday it is in talks to sell large parts of its business after the loss of backing from two Swiss asset managers which underpinned key parts of its supply chain financing model.

Greensill, which was founded in 2011 by former Citigroup banker Lex Greensill, helps companies spread out the time they have to pay their bills. The loans, which typically have maturities of up to 90 days, are securitized and sold to investors, allowing Greensill to make new loans. Greensill’s primary source of funding came to an abrupt halt this week when Credit Suisse and asset manager GAM Holdings AG suspended redemptions from funds which held most of their around $10 billion in assets in Greensill notes, over concerns about being able to accurately value them.

Two sources told Reuters on Wednesday that SoftBank-backed Greensill Capital is preparing to file for insolvency, adding that the sale talks were with U.S. private equity firm Apollo.

Greensill and Apollo did not immediately respond to requests for comment on Greensill’s insolvency preparations, which were earlier reported by the Financial Times, or on the sale talks.

Japan’s SoftBank, which has invested $1.5 billion in recent years in Greensill, also declined to comment.

BaFin said an audit found that Greensill Bank could not provide evidence of receivables on its balance sheet purchased from mining tycoon Sanjeev Gupta’s GFG Alliance. GFG did not respond to a Reuters request for comment on BaFin’s findings.

“The moratorium had to be ordered to secure the assets in an orderly procedure,” BaFin said in a statement, adding that the Bremen-based bank would be closed for business with customers. It declined to elaborate.

Greensill Capital said in a statement that Greensill Bank always “seeks external legal and audit advice before booking any new asset.”

CASH RETURN

Greensill Bank had loans outstanding of 2.8 billion euros and deposits of 3.3 billion euros at the end of 2019, rating agency Scope said in an October report, which did not detail the bank’s exposure to GFG.

The bank is a member of the Compensation Scheme of German Banks which means deposits up to 100,000 euros ($120,740) are protected. The German regulator said withdrawals were not currently possible, but gave no further detail in a statement.

Prosecutors in Bremen said earlier they had received a criminal complaint from BaFin regarding Greensill Bank, but did not provide further details on it.

In Britain, meanwhile the financial regulator took action against GFG’s own trade finance arm Wyelands Bank. The Bank of England’s Prudential Regulation Authority said it had ordered Wyelands to repay all its depositors. It said in a statement that it had been engaging closely with Wyelands, but did not say why it had taken the action.

GFG said Wyelands, which had over 700 million pounds ($979 million) of deposits according to its latest annual report, would repay deposits and planned to “focus solely on business advisory and connected finance”.

A GFG spokesman declined to comment on the BoE statement.

Credit Suisse said on Wednesday it is looking to return cash from its suspended funds dedicated to supply chain finance, which is a method by which companies can get cash from banks and funds such as Greensill Capital to pay their suppliers without having to dip into their working capital.

“Given the significant amount of cash (and cash equivalents) in the funds, we are exploring mechanisms for distributing excess cash to investors,” Credit Suisse said in a note to investors on its website.

Credit Suisse said that more than 1,000 institutional or professional investors were invested across its funds.

($1 = 0.8282 euros)

($1 = 0.7153 pounds)

(Reporting by Tom Sims and Patricia Uhlig in FRANKFURT and Tom Bergin in LONDON; Additional reporting by Brenna Hughes Neghaiwi and Oliver Hirt in ZURICH; Editing by Alexander Smith)

Continue Reading

Banking

Britain to review surcharge on bank profits

Published

on

Britain to review surcharge on bank profits 3

LONDON (Reuters) – Britain’s finance minister Rishi Sunak has said the government will review the surcharge levied on bank profits, in a bid to keep the UK competitive with rival financial centres in the United States and the European Union.

Sunak said in his Budget statement on Wednesday he was launching the review so that the combined tax burden on banks did not rise significantly after planned increases to corporation tax.

Leaving the surcharge unchanged would make UK taxation of banks “uncompetitive and damage one of the UK’s key exports”, the government said in its Budget document.

Changes will be laid out in the autumn and legislated for in the forthcoming Finance Bill 2021-22, the document said.

The surcharge on bank profits raised 1.5 billion pounds for the government in 2020, the document showed.

It is separate to the more lucrative bank levy on bank balance sheets, which raised 2.5 billion pounds.

(Reporting by Iain Withers, Editing by Huw Jones)

Continue Reading
Editorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.

Call For Entries

Global Banking and Finance Review Awards Nominations 2021
2021 Awards now open. Click Here to Nominate

Latest Articles

Newsletters with Secrets & Analysis. Subscribe Now