GROUP 15 – How traditional banks compete with disruptive banking technologies ?

Online banking answer the new needs of instantaneity and flexibility.

Only banking entrepreneurs started from the observation that peoples were fed up of traditional banks for decades, because of their rigid bureaucracy, their indecent hours and days of opening, and the hidden and blurred prices for special operation. Therefore, they began to develop, thanks to the rapid expansion of internet and its securisation, new online banks were launched to break the rigidity of traditional banking systems, adding a wider flexibility for their customers. It leads to the creation of Boursorama, the first French online bank in 2006. Beginning with a simple website proposing information about finance and banking services, it’s board of directors decided to create a total online bank, proposing the same services as traditional ones, with lends, saving accounts and life insurance plans. Followed by other competitors, market of online banks is now mature, and the online French banking market now count 2.5 million of current account.

How traditional bank is fighting in order to keep and attract new customers ?

Seeing the huge increase of online competitors and the desinsterest of young customers for their un renewed offers, traditional banks were long to answer but did it strongly. In 2014 Societe Generale, one of the biggest European bank launched a tender offer to take control of boursorama. Thus, some traditional banks integrated the online banking markets by acquisitions, or by launching their own online bank. For instance, BNP Paribas launched Hello Bank ! as a subsidiary, which is now the French online bank with the biggest customer portfolio. Accompaning this strategy, established banking group, such as BNP Paribas launched dematerialized agencies, to satisfy moving customers, who wants an online bank for the flexibility and a counsellor, taking care of their money, which can be can contacted by Videoconferencing, texting during enlarged opening hours.

Example of the BNP Paribas online bank application software :

You can chat in live with a financial advisor

Brief overview of you account

 

However with innovators on the market such as Bankin'(a french start-up). Bankin’ allows customers to have advice  from a virtual advisor and manage to gather all their accounts from their different bank. For example, bankin now give you advice that your bank advisor will not tell you, such as « you should renegotiate your loan agreement. In fact this application is neutral and want to orientate people on the right direction.

Sources:

  • http://www.observatoire-metiers banque.fr/f/etudes/sf/plus/s/marche_banques_en_ligne
  • http://www.nextbanq.fr/chiffres-marche-banque-en-ligne/
  • https://www.boursorama-banque.com