How old banks are responding to challenger banks (research report)

I got an interesting research report from Economist Impact the other day, commissioned by Temenos. Usually I ignore such emails and updates, but this one was interesting as it’s focused upon how traditional financial providers are competing with challengers like Monzo, Starling, Bunq and Chime.

According to the study, “Challenging the challengers: Europe’s banks face the competition”, almost half (43%) of European banks are investing in fintech start-ups, and a third (36%) are building their own greenfield digital bank or fintech company.

European banks are also migrating core banking systems to public cloud and SaaS in greater numbers than their counterparts in other regions. Over a fifth (21%) of European banks see cloud as a strategic priority, ensuring their operations are agile and secure to compete with more nimble competitors.

AI is also a key part of their technology investment strategy, particularly to improve the customer experience and support digital marketing, with three quarters (75%) of European bankers believing that the banking sector will be significantly impacted by generative AI.

The report reveals European banks are more likely to view neobanks as their company’s biggest competitors in the next five years compared to other regions. However, payment players and technology providers continue to be top of mind, with payments being the space European banks predict new entrants will gain the most market share. HSBC recently launched Zing, a new multi-currency payments app to compete with the likes of Wise and Revolut.

About this research:

Economist Impact conducted a study, commissioned by Temenos, to understand emerging trends in the banking industry. This report presents insights from a global survey of 300 executives in retail, commercial and private banking spanning Europe (25%), North America (23%), Asia Pacific (18%), Middle East and Africa (17%), and Latin America (17%). Respondents perform various job functions, such as IT, customer service, finance, marketing and sales, strategy and business development, and general management, among others. Half of the respondents were C-suite executives. This is the seventh year that Economist Impact has conducted this survey. The research also included interviews with industry practitioners to gain further insights.