Banks losing customers to P2P Lending
- May 15, 2016
- 2 min read
For the 2nd consecutive year, improved levels of customer experience banking have stalled, according to the twelfth edition of the World Retail Banking Report (WRBR) released by Capgemini and Efma - based on the study of 32 markets and more than 16,000 retail banking customers.
Stagnation in overall customer experience, combined with an alarming increase in customers willing to leave their banks, weakens bank-client relationships and helps the growth of non-banking competitors, such as peer-to-peer (P2P) lenders, crowdfunding, FinTech, e.t.c.
These findings underscore the need of technology investments that improve customer experience, in order to provide attractive digital services with faster processing time and less errors.
In addition to lower levels of customer experience, the WRBR shows that the propensity of customers to leave their bank (especially customers of Generation Y) is increasing worldwide, and it has significantly reduced the willingness to give references or buy additional products. The percentage of clients who said the likelihood of leaving their main bank in the next 6 months has risen by 12%. Globally, less than 50% percent of Gen Y customers are likely to continue with their main bank in the next 6 months.
The reasons for customers to leave their banks could be the increase in non-bank competition and the growth of newly created peer-to-peer (P2P) lenders that offer attractive digital products. All these factors provide non-banks the opportunity to alienate customers from major banks. Peer-to-Peer (P2P) lenders and crowdlending, in particular, with their range of simple, flexible and intuitive services free of legacy systems, are at the top of the list of competitors. 83% of banking executives believe that customers are comfortable banking with crowdlending. Peer-to-Peer (P2P) lenders have already gained a significant presence in North America and Western Europe. The combination of disenchanted customers with the agility and innovative nature of Peer-to-Peer (P2P) lenders, is leaving the door open for them to gain market share.
The challenge for banks is trying to defend existing market share, while figuring out how to stay relevant in a digital banking future. Some of the organisations are approaching the market by either funding P2P platforms or putting money behind start-ups, which is a way for them to get into the game.
We believe that banks are better off partnering than doing it themselves due to the speed by which things are changing.
Comments