Banks: Covid accelerates digital transformation

The Covid-19 pandemic and successive confinements have changed the way banks' customers use their services. To adapt to the health crisis, banks have been forced to accelerate their digital transformation. Here are the details of this digitalization.

Customer banking behaviour has changed

While banks didn't wait for the health crisis to begin before extending the range of online services available on their sites and applications, the Covid-19 pandemic was a gas pedal. Many projects that had been planned for several years are now being implemented in just a few weeks.

It has to be said that the various containment measures have significantly altered customer banking behavior. As early as April 2020, according to figures from Fidelity National Information Services (FIS), new mobile banking registrations jumped by 200%, and traffic increased by 85% for 50 of the world's largest banks.

What might have been a temporary change in usage has lasted: the lifting of traffic restrictions has not put an end to these new behaviors. Today, mobile applications are still used much more frequently by customers, as banks are quick to point out in their quarterly results.

In the summer of 2021, BNP Paribas' mobile applications recorded a 25.1% increase in daily connections compared with the 2nd quarter of 2020, to almost 5 million. The websites and mobile applications of the CIC and Crédit Mutuel networks (excluding Arkéa) recorded a record 1 billion connections in the 1st half of 2021. The number of electronic signatures increased by 94%, to almost 6.5 million.

As for Groupe BPCE, at the end of June 2021, it totaled 8.2 million active customers on mobile applications, representing an increase of 14% in half a year. Transfers via mobile applications have also increased, up 32% in one year.

Digitalization means more than new remote services

According to consulting firm Roland Berger, 60% of banks took advantage of the containment period to expand their product offering. However, the Covid-19 pandemic has not been synonymous with a genuine digital revolution for banks.

Most of these infrastructures were in place long before the health crisis, enabling customers to carry out, at the very least, simple operations on bank websites or applications.

According to Christian Heinis (Roland Berger), certain new services, such as remote mortgage applications, are not really revolutionary, because they are exceptional. A customer will only use them a few times, which reduces the impact of this type of new digital service.

And while new services are being rolled out, the digital transformation of banks faces a number of challenges. Current infrastructures are costly, reducing banks' ability to finance new projects. New technologies associated with the cloud must be able to coexist with legacy IT systems, which represents a larger and more costly task than simply digitizing new offerings.

Finally, banks are also facing increased cyber risk: as more services are offered online, the threat of cyber attacks is also on the rise, while becoming increasingly sophisticated and complex to thwart.