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New research from Economist Impact finds that European banks are fighting back against competition from platform players, neobanks and payment providers.
According to the study, “Challenging the challengers: Europe’s banks face the competition”, almost half (43%) 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.
“Fintechs and neobanks took the lead in using new technologies to provide better customer experiences,” says Jonathan Birdwell, Global Head of Policy & Insights, Economist Impact.
“European banks are now fighting back, emulating the way non-traditional players have used technology to reach consumers who had been underserved by traditional financial services, and to appeal to existing customers with support in managing their personal finances.”
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.
Europe’s banks see migrating core banking systems to the cloud and SaaS as a strategic priority, to improve customer experience and ensure operations are agile and secure
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.
“The competitive landscape is shifting,” notes Kanika Hope, Chief Strategy Officer, Temenos.
“As neobanks and fintechs experience growing pains and face funding difficulties, Europe’s banks are taking advantage of the opportunities afforded by open banking by pursuing collaborations with their challengers to offer a wider range of better services to their customers. T
hey are also investing in technology, using cloud-native banking platforms and SaaS to improve the customer experience and ensure their operations are agile and secure.”
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