Deloitte Luxembourg Digital Banking Benchmark Improving ... · The Deloitte Luxembourg Digital Banking Benchmark ... efficient and provide a better customer experience. 4 ... Deloitte

Deloitte Luxembourg Digital Banking BenchmarkImproving the digital performance

Contents

Executive summary 3

Retail banks in focus 4

Banks face a changing environment 6

Retail banks analysis 8

The Digital Banking benchmark results 10

Content and functionalities 12

Safety and security 16

Design and ergonomics 17

Navigation 18

Onboarding process 19

Mobile and tablet applications 20

Markets outside of Luxembourg 22

Conclusion 23

2

Deloitte Luxembourg Digital Banking Benchmark - Improving the digital performance 3

Executive summary

Getting digital is one way to embrace both objectives, ensuring higher efficiency in some processes (e.g. onboarding, credit offering, etc.) and improved interaction and customer experience. To reap maximum advantages, banks will need to provide above-average performance.

The Deloitte Luxembourg Digital Banking Benchmark provides an overview of the digital offering of the main retail banks in Luxembourg. It provides banks with a better understanding of their own digital performance across five key dimensions (onboarding, content and functionalities, design and ergonomics, navigation, and safety and security) and 140 detailed criteria.

The benchmark identifies three types of digital performers in Luxembourg: (1) Luxembourg leaders (2) medium performers and (3) clear sub-performers:

1. The leading group of banks exhibits a number of best practices regarding digital performance. However, it lags behind some international universal and retail banks, who have put customer-centricity and tech savviness at the core of their strategy to provide exceptional customer service and drive their own efficiency (examples include BBVA, Barclays, Bank of America, Citi, and Umpqua Bank).

2. Medium performers offer a well-crafted basic digital banking offering, including most basic functionalities, such as balance consultation, transaction history and basic money movement, but lack some of the added-value functionalities provided by leading banks, such as quick transfers, investment management, and information on insurance products.

3. The group of sub-performers does not fulfil all basic requirements defined for a digital banking offer and should react quickly in order to catch up with the rest of the market.

In an increasingly connected and competitive world, where rising customer expectations in terms of service offering, user experience, and connectivity, etc., as well as increasing operating, IT, and regulatory costs affect banks, they need to find new ways to become more efficient and provide a better customer experience.

4

In order to improve their digital performance and derive full benefit from an elaborated digital strategy, we suggest the following action points for banks in Luxembourg:

All actors should improve the onboarding

process for all types of onboarding

approach (brick-and-mortar, brick-

and-click, and pure click) by

reducing complexity and the

effort required.

1 All banks should increase their use of digital to drive

process efficiency. Encouraging customers

to choose interactive self-service channels,

especially for simple tasks, allows banks to free

resources for more value-added operations

and to compete more efficiently with agile

new entrants, who have constructed their

business model around digital.

2

Retail banks in focus

Mass-customizationwill drive banking in the future. Banks should segment

customers to ensure targeted content and provide a

customizable online offer, which will propel improvements

in customer experience and an enhanced feeling of

safety and security. Using digital analytics to obtain a

360-degree view of their customers will help banks to

understand customers’ needs and to respond to them.

3

Luxembourg leaders should look at adopting truly innovative tactics by

looking at best practices from abroad to strengthen

and protect their leading position. Banks belonging

to international groups in particular should look

towards capitalizing on group investments when

developing their digital strategy.

4

Medium performers should increase the number of

value-added functionalities provided

to improve customer experience.5

Sub-performers should ensure that basic

“must-have” functionalities

are provided.6

5

6

Key trends, such as changing customer demographics, the emergence of non-traditional competitors, increasing regulatory requirements, and pressure on fees are changing the competitive environment in which banks operate. Banks have to serve current, but also new types of customers with new and evolving requirements and expectations in an ever changing and regulated environment, all the while competing with existing and new actors. To respond to these trends and to create a sustainable competitive position, banks need to optimize their digital performance.

The 21st century customer: connected, with rising expectations and decreasing loyalty, expecting a top-notch digital customer experience

Generation X and Y represent key consumer groups for banks in the 21st century. Living in a world, where online and mobile are key commodities in all aspects of life, digital channels become essential means to carrying out banking operations. In Luxembourg, we estimate that 75 percent of people currently use online banking1 and 45 percent2 use mobile banking. Furthermore, in five years’ time, it is likely that mobile banking will have caught up with internet banking3.

The new generation of customers requires banks to change their business models. The 21st century customer has high expectations in terms of service, interaction, and experience. Less loyal to their banking partners than previous generations, these customers are ready to switch banks at any time if provided with what they consider to be a better offer (better product, pricing, service, or a better online or mobile application, etc.).

Traditional banking business models focused investments in customer experience on the few “moments of truth” in the customer lifecycle; capturing the customer, locking the customer in, and maintaining rare contact with the customer. Customer contact occurred only a few times per year when customers had exceptional requests, such as for a new house, a new car, or a new insurance policy. Through digital channels however, the 21st century customer interacts with the bank on an almost daily basis, increasing the “moments of truth”.

Banks face a changing environment

A sustainable business model for the future will use digital to drive operational efficiency and improve customer experience.

1 Statista, 2014

2, 3 Deloitte Analysis

Figure 1: Current use of online and mobile banking in Luxembourg

45%Use mobile banking in Luxembourg

75%Use online banking in Luxembourg


If banks want to retain these customers—as well as attract new ones—they will need to change their business models and provide a top-notch customer experience at each one of these “moments of truth”, on a daily basis. The high expectations that 21st century customers have of their bank are shown in Figure 2.

Non-traditional entrants, pressure on fees, and increasing regulation are further market trends requiring banks to rethink their strategy

Reacting to changing customers, non-traditional market entrants successfully enter markets historically dominated by banks. Banks’ new competitors, including Google Wallet, CurrencyFair, and Kickstarter, provide services ranging from payment to financing solutions. Built around a digital offering, with more agile structures than banks, and an abundance of customer behavior data

at their fingertips, they revolutionize digital customer experience and democratize traditional banking strongholds and revenue sources.

In Luxembourg, the current digital offering still leaves much room for improvement in terms of efficiency and customer experience. A number of trivial tasks, including opening an account, changing the name of the account, or grouping accounts, are complicated online, and almost impossible without visiting a branch in person.

The Digital Banking Benchmark evaluates the performance of banks in Luxembourg regarding customer experience and efficiency in key areas, highlights deficiencies, and provides suggestions for improvement in banks’ digital strategies.

Figure 2: The 21st century customer has high expectations from banks

ConvenienceBanking - anyway, anyhow, anytime

ControlControl personal

finances - supported by digital

tools

ConsistencyExperience a seamless transition - across all

channels

ConvergenceChannels and devices

used for banking converge

CollaborationCommunicate and

exchange - in real time

CustomizationTailored solutions -

centred around “me”

8

Figure 3: Survey methodology

5 dimensions

About 10 retail banks

Retail banks are evaluated on five dimensions analyzing bank performance along digital touchpoints of the customer journey.The survey provides a detailed analysis of the key aspects of digital banking, including public websites, customer websites, mobile websites, and applications of retail banks in Luxembourg:

Onboarding process

(5 criteria)This dimension analyzes levels of automation, responsiveness, service, and administrative documentation and requirements during the onboarding process

Content and functionalities

(90 criteria) An in-depth analysis of “must-have” functionalities, as well as differentiating “added-value” functionalities

Design and ergonomics

(28 criteria) The design of the digital offering should optimize usability, user experience, and ergonomics

Navigation(11 criteria) Information should be easy to find and readily available, navigation between public and customer websites and applications should be seamless

Safety and security

(12 criteria) Money security is frequently the most important aspect for customers, but additional protection regarding privacy and safety is important

Retail banks analysis


Banks criteria:0—does not satisfy this criterion, 1—below average, 2—average,3—higher than average, 4—leading

140 criteria rated from 0-4

Above average

Average

Below average

Not satisfactory

Leading

Rating Criteria

43210

The possible rating for each criterion ranges from 0 to 4, with 0 representing an unsatisfactory performance and 4 representing a leading performance. A weighted compilation of performance on criteria provides an overall ranking of each bank analyzed, and highlights where differences exist. In order to provide suggestions for improvement, best practices from markets abroad are put forward to illustrate potential paths of improvement for Luxembourg banks.

By rating the performance of about 10 key banks in Luxembourg across 5 dimensions, and more than 140 criteria selected to reflect key components contributing to optimal customer experience and efficiency, the survey enables a fair comparison of banks.

The Digital Banking benchmark results

Overall, banks can be classified into three types of digital performers: Luxembourg leaders, medium performers and sub-performers.

1. Luxembourg leaders

A third of the banks in our sample belong to the group of Luxembourg Leaders in terms of their digital offering

These banks offered the best combination of online and mobile capabilities in Luxembourg by combining “must-have” and advanced features and making it easy to navigate their online website, with simple account balance visualizations, sophisticated transaction history search functions, and a visually stimulating environment, as well as fulfilling the required safety and security standards. Nevertheless, they only scored 68 percent of possible points in our benchmark, indicating that there is still room for improvement for these banks.

• One of these banks’ secure sites stands out in particular for its range of sophisticated secure site features, such as making money movement particularly easy with a quick transaction option, offering customers an accurate spending categorization, and even displaying information on insurance products

• In addition, two banks analyzed provide a well-integrated investment management platform and the possibility to switch easily to paperless for all products and accounts

• Lastly, these banks provide customers with information in a transparent way. Information on products and their respective pricing can be found easily and is easy to understand

Luxembourgleaders

Distribution of Luxembourg banks' digital performance

68%

33%

40%

33%

58%

33%

Percentage of maximum possible score achieved on average by banks in each group

Medium performers

Subperformers

Figure 4

10


2. Medium performers

Banks in the medium performer group lag behind competitors, but they can catch up

Less mature digitally than Luxembourg leaders, the medium performers nevertheless offer a solid performance on multiple criteria. By making only a few small changes, these banks could quickly catch up with the leading banks.

• They provide the typical basic functionalities and content required by banks, such as balance consultation, transaction history, etc., but fewer value-added functionalities than the leading competitors. Examples of such value-added functionalities are online investment management platforms and quick transfers

• Banks in the medium performance group have relative strengths. Certain banks perform particularly well regarding customer service and assistance while others have above-average performance concerning digital alerts, allowing customers to set-up personalized digital alerts

3. Sub-performers

Adapting the digital offering would allow banks in the sub-performing group to improve customer experience and process efficiency

In the sub-performing group, we note that some functionalities required by customers to carry out their basic day-to-day banking operations are missing and value-added functionalities are limited.

• The missing standard functionalities could hamper customer experience. Although certain operations are easily available online with their bank’s competitors, customers need to contact their branch through another channel to carry out the same operation. This keeps customers offline and in-branch, rather than drawing them towards digital channels

• The lack in automation reduces potential efficiency gains, as well as benefits to customer experience. Increasing efficiency should be a key consideration for sub-performers, in order to reduce the cost base and to focus resources on higher value-added functionalities

• Regarding security, actors in this group offer the most limited standards and there is little innovation regarding features and navigation


12

Onboarding is a key touchpoint in the customer journey with banks—both online and offline. Responsiveness, user-friendliness, and efficiency of the process are essential factors that determine whether the bank can gain new customers or not. Digital channels provide a unique opportunity for banks to serve customers quickly, efficiently, and in the most convenient way possible, while freeing resources to focus on more value-added tasks.

The Digital Banking Benchmark shows that banks in Luxembourg are not taking advantage of these opportunities and keeping customers in-branch:

• None of the banks analyzed allow the customer to open an account end-to-end online. Although more than half of the banks allow accounts to be opened online in theory, at least a minimal amount of branch intervention is necessary (i.e., sending documents by post to the bank)

• The process of opening an account is extremely lengthy and complicated. The requirement for customers to post documents in particular demands significant effort from them. Furthermore, certain banks even have stricter requirements for online account opening than for offline account openings (e.g. minimum deposits)

• A third of banks analyzed do not offer any possibility of opening basic accounts online or subscribing to online services

• Overall, it is currently easier for customers to open bank accounts by visiting the brick-and-mortar branch than through online channels. This is in stark contrast to new entrants, such as PayPal, who offer an end-to-end online process

Customer preferences regarding onboarding and account opening are likely to continue to vary between pure brick-and-mortar, online, and brick-and-click models. As customized service has become a key requirement for customers, banks—which will be able to cater to the needs of each customer type—will be able to position themselves for success.

However, in order to deliver a true competitive edge through digital, a bank will need to go further and address key industry trends.

Examples of trends currently affecting the industry are:

• Digital branch delivery: omnichannel and the deployment of digital within physical branches will reshape customer interaction, create an improved customer experience, and drive efficiency by freeing resources. Examples of digital delivery within branches include the use of tablets to drive customer service within the branch, “digital walls” that provide information and inspiration to customers, and paperless receipts, which reduce paper waste

• Innovating identity verification: simplified online identity verification processes for account opening will improve customer experience for both “pure-click” and “click-and-brick” customers

Onboarding process: complicated processes and low user-friendliness characterize a decisive customer touchpoint for most banks.

Figure 5: Possibility to open a bank account in Luxembourg

67%Online account openingpossible, with some branch intervention

33%Online account opening not possible


Content and functionalities: the majority of banks offer basic online functionalities, but only a few of them are able to differentiate themselves by offering value-added services.It is possible to differentiate between two main types of online content and functionalities: basic content functionalities and value-added content and functionalities. Basic functionalities are required in order to avoid dissatisfaction, but are unlikely to positively affect customer experience in a meaningful way. Value-added content and functionalities, in contrast, will contribute strongly towards a positive customer experience. The figure below shows the different categories of functionalities, as well as the number of banks that provide these functionalities.

Complete information on day-to-day account and products

Information on prices

Consultation of account balances

Carrying out transfers and payments

Carrying out internal bank transfers

Carrying out European bank transfers

Carrying out international bank transfers (outside EU)

Consultation of the limit of debit card

Consultation of historical data of credit card

Consultation of the limit of credit card

Modification of the limit of debit card

Modification of the limit of credit card

Secure mail box

Communication with an advisor

100%Complete information on insurance products

Consultation and printing statements

Currency converter

Current account opening

Ordering a new debit card

Ordering a new credit card

Booking in-branch appointments

Invesments in bonds

83,3%Overview of specific products (e.g. for young people)

Complete information on savings and investments

Complete information regarding loans and financing

Frequently Asked Questions (FAQ) section

Consultation of standing orders

eStatements

Carrying out standing orders with a fixed amount

Ordering currencies

Modification of standing orders

Canceling of standing orders

Assistance service

Consultation of personal investment portfolio

Investments in stocks

Investments in funds

83,3% 66,6%66,6%

Figure 6: Basic functionalities offered by all leading and the majority of medium performers

14

50%50%Stock markets accessibility

Financial and economic news

Online-questionnaire on investment profiles (MIFID)

Securities account opening

Account personalization

Setting up a custom budget or a savings goal

Calculation of interests on loans

Investments in commodities

Dedicated online branch

Marketing for additional banking products

User's spending categorization and analysis

Deposit account opening

Savings account opening

Quick payments

Setting digital alerts

Investments in structured products (e.g. options)

Simulation of investment activities

Complete information on his insurance contracts

Blocking debit card easily

Investment advices

33,3%33,3%

16,6%16,6%

P2P (pure web-based, not mobile)

Tax calculator

Savings pensions account opening

Carrying out standing orders with a variable amount

Modification of person holding a proxy on the account

Grouping accounts

Innovative ways of investing solutions (e.g. crowdfunding)

eBills

Safe-deposit box

Simulation of insurances

Proactive online chat

Ongoing 24/7 help desk

Investment in a virtual stock market platform

0%

Figure 7: Value-added functionalities currently mainly offered by leaders and some medium performers

Figure 8: Value-added functionalities offered by banks abroad but not in Luxembourg


Besides the pure provision of services, the quality of the content and functionalities is also essential. Visitors to public websites mainly search for information; complete and understandable information regarding products and pricing is therefore the key content for public websites. While product information is exhaustive and comprehensible for most banks, some banks underperform regarding the provision of standard information on products. It will very soon become necessary to increase the amount of information available to potential customers. Some banks’ performance was insufficient regarding the provision of information in their Frequently Asked Questions section.

As the figure above shows, most banks provide “basic” functionalities relative to day-to-day account management, such as checking account balances, initiating transfers and payments, consulting and printing account statements, ordering currencies, or providing their customers with a secured mailbox. Concerning the quality of these services, however, only half of the banks analyzed offer a truly satisfactory performance regarding standard functionalities.

Furthermore, even fewer banks are able to differentiate themselves from competitors by providing high quality, high value-added digital functionalities for consumers (e.g., online branch, cataloguing and spending analysis, simulation and conversion, or investment tools). One third of banks underperform regarding the content and functionalities of their online offering.

A positive observation of the benchmark is that banks in Luxembourg are taking advantage of digital possibilities to streamline their regulatory procedures (50 percent of banks have online questionnaires for MiFID II).

Foreign banks exhibit practices that go significantly beyond the current offering in Luxembourg in terms of online content and functionalities. Some clear examples of best practices that banks abroad are currently applying include:

• Providing P2P payments through social media (e.g., transferring money to Facebook friends)

• Providing customers with innovative and alternative investment opportunities, such as crowdinvesting, which allow the personalization of investments and cater to the needs of particular groups of investors (e.g. micro investors)

• Providing video assistance and video banking services to customers builds a strong personal relationship with customers through digital channels

• Providing e-bill services improves convenience for customers

Use online to support regulatory procedures

%5Figure 9

While product information is exhaustive and comprehensible for most banks, some banks underperform regarding the provision of standard information on products

16

The level of available functionalities varies between basic/standard packages and premium online banking packages: most functionalities are included in free, standard online banking packages and in order to charge premium fees, banks increasingly offer customizable packages

Most banks abroad offer a good quality basic digital package for free. Indeed, only small differences between the functionalities included in the basic and premium packages exist. As basic packages are increasingly subject to pressure on fees, banks add certain functionalities to premium packages to charge higher prices.

Unfortunately, many of the functionalities contained in these packages, such as credit cards that are free of charge or financial analysis, are likely to become commodities as more and more banks include them in basic packages. To continue charging for premium products, banks will need to review customer segmentation and add appropriate new, innovative premium functionalities, for which customers will be willing to pay premium fees.

15 key functionalities are must-have components of a basic banking package:

• 11 main features are offered for free by all banks in their basic package

• 4 other banking activities are covered by 5 out of 6 banks

Six added functionalities are not currently part of the basic offering for all banks and can be classified as premium features, for which customers are willing to pay. However, as these functionalities are included in the basic packages of competitors, they are likely to become commodities in the future.

• Some banks propose customized solutions to meet personal banking needs in this context. These customized solutions address the precise needs of consumers and provide maximum service tailored to expectations—at a price

• Banks will therefore need to provide new solutions for which customers will be willing to pay

Figure 10: Standard vs. Premium package functionalities

100%

100%

100%

100%

100%

100%

100%

Open current, savings and deposit accounts

Consult and manage accounts

Initiate transfers and payments

Withdraw money from internal ATMs

Secure mail box

Download mobile application

Consult and modify debit and credit cards

Basic functionalities Premium functionalities

100%

100%

100%

100%

Information on financial products

Tools and help through a dedicated online branch

Locate bank branches and ATMs

83%

83%

Take out a loan

Order currencies

Out of scope for 1 bank

Guarantee a level of optimal security

33%

Generate and print financial statements

Invest in financial products and funds

Financial analysis

67%

67%

100%

33% Credit cards (Visa, MasterCard)

83%

83%

Withdraw money from external ATMs

Investment advice

Insurance services

Financial simulators & calculators

83%

83% 50%

33%


The differences observed between competitors with regard to design and ergonomics are less significant than for other dimensions. All banks offer good performance regarding compatibility with different browsers, consistency of the website across different pages, transitions between public and customer sites, and prefilling known customer information.

Certain characteristics nevertheless allow some banks to differentiate themselves from competitors on the basis of design and ergonomics. Specifically, elements allowing customers to personalize their online banking tool, such as the provision of the website in an additional language (e.g. Dutch, Portuguese), cross-selling based on customer preferences, or the possibility to set up personalized digital alerts are strong points for some banks. We suggest that further elements allowing customers to set personal preferences could increase customer experience. One example of allowing further personalization would be to allow customers to define the preferred font size in their personal space.

These practices are a basic service for banks abroad. If implemented systematically, they will significantly improve customer experience, and render banking more enjoyable for customers while maximizing efficiency.

Design and ergonomics: low differentiation between competitors with regards to design and ergonomics for Luxembourg banks—a little effort will go a long way.

100%

100%

100%

100%

100%

Browsers compatibility

Consistency

Seamless transition from the public to the customer website

Saving contacts of frequent recipients

Known user information prefilling

Website available in English, French and German

Website available in other foreign languages

Offering online Not offering online

Setting frequency preferences for digital alerts

Events calendar participation

Cross-selling depending on customer profiles

83%

33%

33%

16%

0%

Possibility to go paperless for all products and accounts50%

Figure 11: Percentage of banks offering the functionalities relative to design and ergonomy

18

100%

100%

66%

0%

83%

50%

Customer service options centralized in a single screen

Facility to find a past transaction

Facility to find information regarding specific products

Facility to find information on pricing

Keyword search for customer website

Keyword search for public website

Money management tools integrated with everyday online banking tools

83%


Not all customer groups are the same and banks will need to have this in mind when designing navigation of their digital tools. Segmenting customer groups to provide targeted, customized content will facilitate navigation. A key aspect in this context will be the landing page.

For customers and potential customers, the landing page represents the first contact with the bank. Any subsequent navigation and redirection should be simple and user friendly:

• One bank provided a landing page experience that was significantly superior to its competitors, by asking customers to attribute themselves to a customer segment in order to display relevant information

• Other competitors did not segment customers before displaying content. The user is subsequently faced with a more complex navigation interface that displays obsolete navigation links

• Segmenting customers will not only facilitate navigation, but also enable targeted product placement, thus increasing the likelihood of further sales

Secondly, transparency towards the customer becomes increasingly important from a customer experience and regulatory point of view. It is essential that information on products and pricing is easily available. For the majority of banks, information regarding products and pricing can be found relatively easily once the relevant part of websites has been found.

Nevertheless, for certain banks, we observe deficiencies:

• Two banks provide very little information on pricing and products and one bank only provides information on pricing in French

• An increase in transparency by providing complete information on products and pricing, which is easily accessible in all commonly used languages, would significantly improve customer experience for these banks

Lastly, we observed that, astonishingly, certain banks did not offer a search facility. This is a significant deficit compared with competitors in terms of navigation usability.

Navigation: segmenting customer groups and adapting content to segments will allow easy navigation for customers.

Figure 12: Percentage of banks offering the functionalities relative to navigation


Safety and security: backed by strong regulatory requirements, security performance is good overall.

The level of information security capabilities offered by the websites of the major retail banks in Luxembourg is good overall, backed by strong regulatory requirements such as the CSSF circular 15/603 enforcing guidelines from the European Banking Authority.

The usage of strong authentication is widespread (all the banks surveyed support token authentication), while 66 percent of them even offer their customers the choice to authenticate themselves either with a token, a smartcard, or a specific USB device (“signing stick”).

However, more than 60 percent of banks do not use extended validation certificates, which are generally used to give consumers confidence and build trust in e-commerce (based on a third-party verification using a highly visual display in the customer’s web browser).

We noticed that most of the security controls implemented on the mobile applications can be considered as adaptive. While strong authentication is always required to consult the banking website, most of the mobile applications surveyed require a token authentication only during initial use and for sensitive operations (such as adding an external beneficiary).

100%

100%

100%

83%

83%

Website available in HTTPS

Security and privacy information easy to understand

Strong authentication requirements for connecting customer accounts

Timeout after a certain period of inactivity

Strong authentication requirement for paiments

66%

50%

Strong authentication requirements for external beneficiary

Possibility to disabile payment functionality

33% Website secured by an extended validation certificate

Stock markets accessibility

Financial & economic news








Value-added functionalities currently mainly offered by leaders and some medium performers












Secure mail box


Overview of specific products (e.g. for young people)





eStatements


Ordering currencies



Assistance service




Complete information on insurance products


Currency converter





Invesments in bonds

Stock markets accessibility

Financial & economic news








Value-added functionalities currently mainly offered by leaders and some medium performers












Secure mail box


Overview of specific products (e.g. for young people)





eStatements


Ordering currencies



Assistance service




Complete information on insurance products


Currency converter





Invesments in bonds


Figure 13: Level of security provided by retail banks in Luxembourg

Once registered, the user generally only needs a basic PIN code for “low-risk” operations.On the security awareness side, all websites offer at least a minimum of information and guidance in order to inform their customers of how to behave safely while using online banking services.

One area of improvement identified for the coming years is the ability to have advanced fraud detection mechanisms and the possibility to define personalized security preferences and alerts. In any case, to be widely accepted and efficient, any security controls introduced should remain as transparent as possible and avoid hampering user experience.

Internationally, we observe a key trend towards the adoption of diversified biometric security. Finger print technology on smartphones, as well as finger vein recognition and facial recognition are some examples of the biometric tools introduced by international innovation leaders.

This trend has also started in Luxembourg where one Bank is already supporting fingerprint authentication for its mobile application, based on Apple’s Touch ID.

20

Mobile and tablets have become a part of consumers’ daily life. Banks are trying to meet the needs of almost half of the population, who use online banking, by providing appropriate applications. Once a value-added innovative service, applications have now become a commodity, expected by consumers, and offered free of charge by all banks. However, differences exist concerning the availability and quality of services.

The availability of applications reflects the popularity of different operating systems. For standard operating software, such as IOS and Android, most retail banks offer applications, for both mobile and tablet. For less popular operating systems, such as Windows for phone or BlackBerry OS, fewer applications exist.

• All banks have applications for IOS

• The majority of banks have applications for Android

• Only one third of banks have applications for Windows

• The availability of applications for Blackberry is very limited. Less than 1/5th of banks offer an application for this operating system

Overall, most applications allow customers to engage in day-to-day management of their accounts from their mobile phone or tablet. The content and functionalities of the applications are aligned with the ones offered by the website solution.

100%83%

33%17%

AndroidiOS BlackberryWindows

Luxembourgleaders

75%

Sub performers40%

Medium performers

50%

Figure 14: Availability of mobile applications across different operating systems

Figure 15: Percentage of maximum score achieved on average by banks in each group

Mobile and tablet applications

Improvements can be made by providing an integrated solution with more value-added functionalities.


As in the case of the website solutions, few banks provide their customers with innovative, value-added functionalities, such as digital payments or P2P transfers. The leading banks can differentiate themselves from competitors by adding some of these value-added functionalities. Examples of such value-added functionalities include mobile wallet functionalities, P2P transfers through Digicash, or simulation activities.

Figure 16 shows the performance of selected applications across four dimensions.

However, there is still room for improvement regarding the mobile offering of banks in Luxembourg:

• The mobile applications currently offer very limited investment management possibilities. Only one application truly permits users to visualize and manage investments from a mobile phone. Improvements in this area could significantly improve customer experience

• A number of banks have several applications that run in parallel. For users, this creates confusion and reduces user comfort as customer experience satisfaction is driven by having a seamless experience

Outside of Luxembourg, mobile channels are the focus for customer-centric innovation. Some examples of market-leading innovation observed abroad are:

• Linking social media and banking applications International competitors are increasingly linking banking applications to social media applications, with examples including allowing access to banking applications via Facebook or P2P transfers

• Including consumers in banking application development Drawing inspiration from an increasingly collaborative economy, one leading bank has launched a mobile banking challenge asking developers around the world to contribute their ideas and offer input regarding how mobile banking should be in the future

Figure 16: Performance of selected actors in the Luxembourg banking sector regarding mobile banking

Content & functionalities

Design & ergonomics

Navigation Safety & security

Actor 6

Actor 5

Actor 4

Actor 3

Actor 2

Actor 1

The leading banks can differentiate themselves from competitors by adding some value-added functionalities

22

Markets outside of Luxembourg are significantly more mature digitally. Adopting best practices will drive digital efficiency and customer experience in the future.

Mass customization and personalization

Providing features to personalize the online experience has become an essential component of digital strategy abroad. Examples of personalization in the banking industry are: allowing customers to choose nicknames for accounts and customize landing pages for customers’ profiles, and cross-selling based on customer analytics.

Reinventing customer assistance and driving efficiency through measures such as P2P-support or 24/7 chat

Customer assistance models based on P2P support (e.g., a bank offers users a financial incentive to create user-help videos on YouTube) provide a revolutionary user experience and drive efficiency by reducing costs for the bank significantly. For more specific queries, a 24/7 direct help desk through online chat can be an effective way to provide human help and expertise when and where customers need it.

Human proximity in online assistance and product promotion through secure video banking

Some banks have re-imagined the 'branch of the future' concept with the launch of a purely video-based channel connecting customers on mobiles and desktops to staff representatives for face-to-face sales in order to promote banking products.Two-way video banking gives customers the confidence to complete more high-value banking activities without the inconvenience of visiting a branch, as well as offering personalized service.

Markets outside of Luxembourg

Electronic bill system

E-bills is a banking service that enables bill to be paid and exchanged to documents such as invoices, credit notes and pay slips to be generated quickly and easily. It is no longer necessary to manually input the payment because the transfer form is pre-filled and then approved or rejected. Embedding those tools is a significant opportunity for improvement in Luxembourg.

Putting digital innovation and reinvention at the heart of strategy

Digital leaders in digitally mature markets fight disruptive new entrants by copying innovative companies and investing in innovation from within or promising FinTech startups. From grassroots models within business units to venture funds owned by banks, digitally leading banks, such as BBVA or Citi, have developed different strategies and adapted their entire structure to ensure that they remain at the cutting edge of technology.Other leading banks reinforce the role of the CINO (Chief Innovation Officer) and hire digital executives to ensure that digital channels are at the core of their strategy.

As digital banking is less mature in Luxembourg than abroad, we suggest that banks look at digital best practices from abroad to adapt their offering. In this context, banks belonging to larger groups may be able to capitalize on group investments. Some examples of best practices offered abroad are:


Conclusion

The current economic situation leaves no doubt that the banking business has to change and become more efficient. Customers demand better pricing and service while banks face increasing costs. The question to be asked when talking about digital strategy is no longer “Should I?”, but rather “How will I?”

The results of the benchmark highlight this and show that banks are investing in their digital offering. The degrees of digital maturity exhibited by banks in Luxembourg vary. While the group of leading banks is starting to reap the benefits of a digital strategy in terms of customer experience, other banks are only just embarking on their digital journey.

For all, however, there are still large gains to be captured in terms of operational efficiency and customer experience by understanding own performance, as well as understanding customer requirements and by looking beyond Luxembourg’s borders to more mature markets.

As banks embark on their digital journey, they will have the possibility to take advantage of the opportunities that digital provides in terms of customer experience and efficiency. Daunting as it may be, embracing digital has become inevitable, and banks can only benefit by taking the plunge.


Contacts

Deloitte Luxembourg560 rue de NeudorfL-2220 LuxembourgGrand Duchy of Luxembourg

Tel.: +352 451 451Fax: +352 451 452 401www.deloitte.lu

Advisory & Consulting

Benjamin Collette Partner - Strategy, Regulatory & Corporate Finance Leader+352 451 452 809 [email protected]

Patrick Laurent Partner - Technology & Enterprise Application Leader +352 451 454 170 [email protected]

Basil SommerfeldPartner - Operations Excellence & Human Capital Leader+352 451 452 [email protected]

Roland BastinPartner - Governance, Risk & Compliance+352 451 452 [email protected]

Esther Bauer Senior Consultant - Strategy, Regulatory & Corporate Finance+352 451 453 465 [email protected]

Stéphane HurtaudPartner - Governance, Risk & Compliance+352 451 454 [email protected]

François Gilles Director - Strategy, Regulatory & Corporate Finance+352 451 453 751 [email protected]

Julien SchaffnerDirector - Operations Excellence & Human Capital+352 451 453 [email protected]

Audit

Martin FlaunetPartner - Banking & Securities Leader+352 451 452 [email protected]

Tax

Pierre-Jean EstageriePartner - Tax+352 451 454 [email protected]

Key contacts

Pascal Martino Partner - Deloitte Digital LeaderStrategy, Regulatory & Operational Excellence+ 352 451 452 119 [email protected]

Petra Hazenberg Partner - Customer & Market Strategy LeaderStrategy, Regulatory& Corporate Finance+352 451 452 689 [email protected]

www.anywealth.lu

Deloitte is a multidisciplinary service organization which is subject to certain regulatory and professional restrictions on the types of services we can provide to our clients, particularly where an audit relationship exists, as independence issues and other conflicts of interest may arise. Any services we commit to deliver to you will comply fully with applicable restrictions.

This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this communication.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.

Deloitte provides audit, consulting, financial advisory, risk management, tax and related services to public and private clients spanning multiple industries. Deloitte serves four out of five Fortune Global 500® companies through a globally connected network of member firms in more than 150 countries and territories bringing world-class capabilities, insights, and high-quality service to address clients’ most complex business challenges. To learn more about how Deloitte’s approximately 225,000 professionals make an impact that matters, please connect with us on Facebook, LinkedIn, or Twitter.

© 2016. Deloitte Tax & Consulting.

Documents

Deloitte Luxembourg Digital Banking Benchmark Improving ... · The Deloitte Luxembourg Digital Banking Benchmark ... efficient and provide a better customer experience. 4 ... Deloitte