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Digital transformation: farewell to bank branches and cash, banking is going mobile

  • 100% digital banking is winning out with Spanish customers on account of its transparency and charge-free policy: 3 out of 4 appreciate digital banking more than ever
  • 50% of Spanish people would no longer use their bank branches if given the chance
  • Over 70% believe that all payments will soon be made by contactless cards, mobile phones and even by voice
  • The freemium banking model is gaining ground: over 60% say they are willing to pay a fixed monthly fee for value-added services
Madrid, 23 June 2020 - N26 mobile bank has presented a study entitled “From the bankbook to the mobile: bank ecosystem evolution” at a virtual event with journalists this morning. The main conclusions reached by the report, which analyses what present-day Spanish customers prefer and are demanding of their bank, suggest that digital banking has become a clear favourite with them and that the Covid-19 crisis has served as a catalyst in the digitalisation process the sector was already undergoing, but which has now speeded up greatly. According to the study, 73% of Spanish people now have a higher opinion of digital banking, while nearly 70% claim to have done some banking business online in the last few months. In terms of different profiles, women and 35 to 44-year-old people use digital banking most. “Technology needs to help people, to make their lives easier. New models that combine security and bank soundness with speed and the structural lightness of technology companies enable us to better respond to an environment that is changing increasingly faster”, explains Francisco Sierra, CEO of N26 in Spain, who adds: “Breaking down geographical and physical barriers to operate more speedily and promptly from anywhere, be it a big city or a small remote village, is one of the big competitive advantages of mobile banking that has been put to the test and has responded to customers in this pandemic.” __Goodbye to cash: towards a cashless society __ The N26 study confirms one of the big changes that has received an even greater impetus during the Covid-19 crisis: half of Spanish customers believe that ATMs and cash will disappear over the next five years. Moreover, these customers would seem to be willing to adopt these new forms of payment. Indeed, over 70 % would be prepared to give up using cash, while the same amount would consider that payment could very well become solely contactless by using the card, mobile phones or even payments by voice or facial recognition. “Our customer activity rate plummeted in the first month of the lockdown: cash withdrawals from ATMs fell by over 63%, while payments by card dropped by 50%. Online purchases also fell, albeit not as dramatically, by around 25%”, explains Francisco Sierra. “We are now seeing signs of V-shaped recovery and have also noticed how there was a quantitative “leap” in card use. Payments made with cards and online payments have returned to pre-lockdown levels, or even higher. Nevertheless, cash withdrawals from ATMs remain low, which points to a change in the pattern of use towards a more cashless society”, concludes the expert. Farewell to branch offices Face-to-face banking also seems to have its days numbered in the short term according to the opinions collected by N26. Practically 50% of bank users in Spain would stop going to their branch offices if their banks make it possible to do all their operations online, while one third would prefer to have their queries attended to immediately by instant chats. Furthermore, 44 % would like to have a mobile app and WebApp and 37% would like to be able to do all of their banking business using only their mobile phone. According to Francisco Sierra: “Nearly all banks have their own app or enable payments to be made using mobile phones, but they are not structured to operate in real time and that makes it much harder for them to adopt innovations that others like us have been developing from some time. As a result, quite often their customers find themselves having to go to the branch office, to call by phone to carry out a simple transaction or even having to go through a lot of paperwork for days; something which many of them would be willing to leave behind if they were offered the possibility of operating online.” The freemium model comes to banking Two thirds of the world’s population admit to having paid unexpected charges or ones they did not know exist, the majority of which are related to their bank account, as a result of having made a cash withdrawal from ATMs or charges related to credit card use. This information comes from the #BigBankingChat initiative that N26 has implemented to help its customers better understand and manage their daily finances. These global data show that, on average, people have found themselves paying unexpected fees (not to mention the rest!) at least 3 times over the last 12 months at a cost of over €22 each time, which translates into paying in excess of €66 a year. Of the European countries studied, Spain was the country where most people reported this type of complaint (81%). Given this scenario, one of the trends that comes out of the conclusions reached in the study is the growing acceptance of the freemium model among bank customers. As is the case in other sectors, and as Spotify and Amazon Prime are doing, this model could very well become standard practice in banking. The freemium model consists of offering a quality, basic service or product free of charge and offering customers the option, should they so wish, of paying a fixed fee for added-value services. According to the data analysed by N26, over 60% of Spanish people would be prepared to pay a fixed monthly fee for services they consider to be essential in their “ideal bank”: free international transfers, free of charge cash withdrawals and currency exchange worldwide, travel, mobile or mobility insurance and exclusive discounts and services with partner companies. “Without a doubt, this model is one of the great benefits brought about by this crisis. And it comes as no surprise that it is also being taken on board in banking; a sector where most customer complaints and claims are related to unlawful or hidden charges and fees, something that does not happen in services that you pay a fixed fee for without having to worry about any small print” says Sierra. Growth potential of mobile banking in Spain Over 80% of those surveyed used “traditional” banking for their daily affairs when the study was done, despite the fact that most of them expressed dissatisfaction with the service they are receiving. Some 44 % of these customers would consider changing to a more digital banking system. “Our study shows how much potential there is for mobile and digital banking in Spain. Our value proposal fully meets the transparency and real digitalisation demands of bank users: you have to be where you customers are, and customers are on their mobile”, states Francisco Sierra. N26 data endorse this idea, revealing as they do that satisfaction levels with digital banking are way above those for traditional banking: 51 % of “digital” customers would give their bank the highest score, as opposed to 33 % of “traditional” banking customers. “This clearly shows how our model is better adapted to responding to the new demands and requirements of modern-day bank users”, points out Sierra. “Consolidated challenger banks like ours have an enormous competitive advantage in this scenario. It should not be forgotten that all fintech companies are in the same challenging situation we are all going through at present and some of the smaller companies are in danger of being left behind. Digital acceleration is clearly good for the sector, and particularly for the customer” concludes the N26 executive.
About N26N26 is Europe’s leading digital bank with a full German banking license. It offers simple, secure and customer-friendly mobile banking to millions of customers in 24 markets across Europe. N26 processes over 140bn EUR in transactions a year and currently has a 1,500-strong team of more than 90 nationalities. The company is headquartered in Berlin, with offices in multiple cities across Europe, including Vienna, Paris, Milan and Barcelona. Founded by Valentin Stalf and Maximilian Tayenthal in 2013, N26 has raised close to US$ 1.8 billion from some of the world’s most renowned investors.Website: n26.com | N26 Press Contact: press@n26.com
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