Big Data




Noemie Papp

Legal adviser

Consumer Affairs & Coordinator Digital issues



Noemie Papp

Legal Adviser

Consumer Affairs & Coordinator Digital issues


  • 1Boost digital inclusion by developing public-private partnerships between banks and public authorities.
  • 2Organise a full-fledged stakeholders debate on innovative payments and pan-EU solutions with consideration for costs and benefits for all stakeholders.
  • 3Promote a cybersecurity awareness campaign highlighting existing and new threats, making digital finance more secure and building trust.
  • 4Conduct a ‘fitness check’ on existing financial services legislation to adjust to the global market reality and to ensure consistency.
  • 5Conduct a joint assessment by both government and industry on opportunities and impact of crypto-technologies.


Noemie Papp

Legal Adviser

Consumer Affairs & Coordinator Digital issues

Banks increasingly turning digital

Banks increasingly turning digital

Banks increasingly turning digital

The digital transformation of financial services is led by many trends.

The development of new technologies

The swift development of new technologies , Internet, smartphones and tablets in less than 10 years and the challenge of new entrants (operating digital-only products and services) and new models, adds a new dimension to the changing role of banking. Technology companies and start-ups rapidly expand their activities to financial services, continually innovating and competing – or collaborating – with banks and other financial institutions in various segments of the financial markets or in activities that do not specifically require a banking licence. This contributes to pushing banks to rethink the way they operate.

The change of customer expectations

The change is also coming from new customer expectations. Today’s customers are not the same as they were ten years ago. Their expectations towards products and services have changed in just a few years. Digital consumers belong to the digital native generation, born and raised with Internet: the Generation Y (born between 1977 and 1994), considered remarkable technology wise, exposed to technology since early childhood and impervious to most traditional marketing; and the Generation Z (born in the mid-90s to early ‘00s), accustomed to a media and online environment in which options are virtually limitless.

Both generations are extremely connected and rely heavily on smartphones/apps and even wearables to enjoy the best customer-experience or benefit from the most popular content. They adapt quickly to new changes and continually seek information or advice on the Internet or social networks. These digital consumers demand more choices, immediate availability and direct access to ready-to-use information and services. They expect fast, safe and simple banking products and services. They want banks to provide more than mere transactional services and expect them to understand their needs and to act as trusted advisers.

At the same time the major milestones in life - from birth to retirement - remain unchanged and faced with these landmarks, consumers continue to make financial decisions. What changes, is the way they approach these decisions. Consumers still shop around for the best services but when comparing and applying for loans, mortgages and credit cards, the majority of them are now using Internet instead of visiting a bank branch.

The way we bank now has considerably changed.

Disruption anticipated

Bankers expect changes in customer channels

Thinking of your total customer distribution, what approximate percentage of your customers is active on the following channels today and how many do you expect to be active in a few years?

  • - 25
  • - 13
  • 37
  • 56
  • 64

Innovation the leading trend for the best customer experience

In order to meet customer demand, banks continually launch, high quality digital communication, user-friendly financial products and services that simplify consumers’ trade and transaction management experience. They lead the change through innovative solutions but successfully preserve their core values: trust, integrity, privacy and security to offer the best of the digital age to consumers.

Today, banks propose more ‘tailor-made’ customer experiences with products adapted to consumer needs: new designed apps to manage their finance, benefit from discounts (in certain shops) and have instant access to their accounts. Banks’ websites, especially online banking sections, are now required to offer a pleasant experience while remaining highly functional. This necessitates rich content including elegant designs, instant search results and interactive features.

The innovative solutions developed by banks aim to create a customer experience which is translated in practice:

From a multichannel to an omnichannel approach

Until recently, most customers banked through multiple channels: going to branches to access products and services to explain their needs; using an Automated Teller Machine (ATM) to withdraw money, and, going online to check their account balance. Such habits have been transformed by internet where everything is dealt with online, including payments and money transfers.

One of the most important examples of innovation in banking is the cross-functionality and the different ways in which to service banks’ clients as well as the real-time transactions initiated by all available channels.

In many countries Peer-to-Peer (P2P), as well as instant payment solutions are flourishing. For example, in some countries banks invested in a new real-time system and developed a shared application for Peer-to-Peer transfer or have started using video channels for client on-boarding and advising customers.

Digitalisation of banks is translated by a transformation from a multichannel approach (focusing on maximising the performance of each physical channel, phone, web, mobile) to an omnichannel approach, putting customer at the centre and promoting the use of channels simultaneously, (instead of focusing on corporate silos). All the channels are now linked to one platform with integrated devices, providing a seamless banking experience for customers.

Transactions and data are updated in real time: world banks offer their clients the possibility to initiate transactions, from anywhere in the world, which banks execute seconds after the client’s request has been made. Customers can access the latest information, whatever the channel chosen, and in a single click a customer can access all the accounts he/she holds in a bank. These facilities improve customer satisfaction and – over time – loyalty.

New Peer-to-Peer payment apps

With new Peer-to-Peer payment apps proposed by banks it becomes easier to pay back someone, reimburse him/her for a restaurant bill, contribute to a collective present for a colleague/friend without sharing your bank details.

Mobile-Point-of-Sale solution

Several banks have launched a mobile-Point-of-Sale solution, known as mPoS, which allows businesses and self-employed professionals to accept card payments using a smartphone. Other banks have built online communities of merchants using a PoS terminal which allows cardholders to access offers and promotions using geolocation technology.

New designed branches

Modern branches called ‘stores’ have been designed with equipped self-service areas, with tablets and new digital technologies but also with private areas to provide immediate personalised advice to customers who request it. They are using video channels for client on-boarding and advising customers. Sometimes banks access customers by means of a pop-up store that can be flexibly set up in shopping centres, markets, or remote places. Banking instruments are adapted with digital signage, intelligent ATMs, et cetera. All processes are digitalised, internally, as well as externally.

Benefiting from face-to face access to an experienced banker who know the customer’s specific situation and provides financial advice for all the important financial decisions the customer takes, is key. Branches appear today more as a “meeting place” to complement online banking and services. In this way, technology supports the “branch of the future” and helps to have a closer relationship with the customer. Despite the enthusiasm for new technologies, customers still value a human contact and a physical point of contact for financial decisions or when they face problems. This direct access clearly represents a value for customers when compared to technology companies which are often limited to providing only a switchboard number.

Biometrics ATM solutions

Advanced biometric solutions have been implemented by banks for ATMs in certain countries. This allows a client to withdraw money without any card. The authentication is made with the client’s fingers (or the network of human veins in the fingers) and the PIN code. Biometrics represent a key instrument for certain people with disabilities.

High definition video conferencing to complete mortgage applications

Some banks have put in place a high definition video conferencing system in their branch to complete mortgage applications in case the staff member who usually handles such applications is not available.

Faster loan application process

Some banks also created apps which display the unsecured limits for their customers, providing information on how much money they can borrow, and giving them a new way to process a loan application.

Partnerships with FinTech Companies and start-ups

o succeed in this highly competitive banking landscape, far from being defensive, banks are implementing collaborative strategies with new companies. Certain banks have already made the choice to invest in Financial Technology companies, known as FinTechs, and/or starts-ups.

Banks have been involved in buy-outs offering exit possibilities for investors in FinTechs. Banks are also hiring digital innovators and providing funding. Research and development remain key areas for future projects. For some, the banking industry is under threat from the technology industry such as big internet companies and emerging start-ups. But the reality goes further than that: banks work hand-in-hand with technology firms. By becoming closer to technologists, banks ensure that customers acquire the next banking technology solution as quickly as possible. However, the transformation of bank business models requires not only hiring new IT talents but also changing the culture and the approach from the top management.

FinTech is a new market. It is 21st century finance. It is the new form of banking, and is related but very different to the old form. Some of the old form players will metamorphose into these new digital fintech players. Some, not all. Some of the new players will take over the markets of the old incumbents. Some, not all”

Chris Skinner

Chairman of the Financial Services Club

What does FinTech mean?

“Fintech” are defined as financial technology companies using software to provide financial services, generally presented as start-ups

How are banks reacting to FinTech?


Digital banking – A strategic priority

The key functions of banks, such as lending, deposits or distribution of currency, will continue to be part of the bank business model. However, this traditional role is by no means sufficient for banks to remain competitive. The role of banks should not be limited to responding to customer demand and providing a secure infrastructure. The role should go further and anticipate customer expectations and next move. Retail banks must offer a broader value proposition to customers. Without changing their approach, traditional retail banks run the risk of becoming obsolete or being pushed back into a back office role, in particular, when considering potentially disruptive technologies (e.g. ‘blockchain’ technologies), a public ledger of digital transactions using crypto-technology) or forthcoming alternative innovative solutions, launched by new competitors. Importantly, it should be noted that digital players – other than banks - have a different approach towards innovation or digital technology.

These players mostly make money by monetising the data they collect when banks aim at pricing the products they propose. What is more, these new digital companies introduce their products which have a disruptive effect and no regard for regulatory implications. The result being that policy makers have to adapt regulation subsequently (e.g. Uber). This approach necessarily facilitates the emergence of innovative products. Banks generally adopt a different approach. For example, they begin by analysing the compliance regulatory framework and how to adapt their infrastructure accordingly. Banks also invest their resources in implementing prudential regulations which might affect their capacity to innovate.

Consequently, banks appear to face regulatory barriers limiting their innovative ambition, whereas new entrants on to the market seem not to experience the same restrictions.

As the digital future draws closer, the market requires banks to become more network and client-focused. Banks are definitely well placed to take up this challenge, going beyond the financial services they now offer and potentially providing an array of new services. While the competition with new entrants is there, this digitalisation creates new opportunities to engage with customers in a different way. They will become the trusted partner that orchestrates a digital ecosystem around their customers. The change is on-going.

Cybersecurity – An essential component

Financial institutions are one of the primary targets for cyberattacks. As a result, the industry is committing considerable amounts of money towards protective measures for customers and to maintaining trust.

After a wave of increasingly sophisticated cyberattacks in 2014, targeting all types of organisations, the banking sector is facing attackers which are streamlining and upgrading their techniques rapidly while the sector is trying to fight back at the same speed. These repeated attacks can affect customers’ finance, their confidence and have a severe economic and reputational consequences on the organisation. According to the 2015 Internet Security Threat Report (Symantec)1, 60% of all targeted attacks last year affected small and medium-sized organisations (SMEs). This creates even greater risks as the majority of SMEs have neither the human nor technological capacity to protect themselves adequately.

Banks in Europe and worldwide are taking these threats seriously. Banks invest heavily in IT systems aiming at the highest possible security levels, but cybercriminals exploit any vulnerability – including on the clients’ side to penetrate the system. In addition dedicated regional and global groups have been created, to share information about security threats, for instance, the EU-Financial Services Information Sharing and Analysis Center (EU FS ISAC), and FS-ISAC (global), to share information on security threats. Importantly, awareness campaigns for employees are organised as numerous detrimental activities begin with an email arriving in a bank employee’s inbox with a malicious code.

This is also the reason why the EBF has signed a Memorandum of Understanding in September 2014 with Europol (and more specifically the European Computer Crime Centre (EC3)). This partnership allows for the sharing of relevant information on cyber threats, as well as targeted actions against specific attacks. The EBF also benefits from the Europol EC3’s intelligence which publishes alerts to inform banks, on a continual basis, on cyberattacks and modus operandi.

“There is and will be no efficient and prosperous European Digital Single Market without digital security and trust. European citizens and businesses have to know and trust that the systems underpinning digital services are safe and secure. Therefore, I have made sure that cybersecurity – which is the very foundation to trust in online services – is one of the strategy’s key pillars and top priorities”.

Günther H. Oettinger

Commissioner for Digital Economy & Society, European Commission Speech Cybersecurity Strategy 28 May 2015.

The necessity to adopt a holistic approach

Existing and future regulations will set the framework for what services banks can offer and what competition they will face. If the European Union’s top priority is to strengthen its competitiveness and to stimulate investment for the purpose of growth and job creation, it is imperative to link the Commission’s digital agenda to the aforementioned goals and that of the Capital Markets Union (CMU) and the forthcoming Green Paper on Retail Financial products and services. Faced with an unprecedented industrial transformation towards a digital future, a more holistic approach is vital. All European Commission services, as well as the other EU institutions should, with the private sector, conduct an assessment on the challenges the EU needs to meet.

Consequently, the impact of any regulation will need to be tested on the (financial) stability, growth and competitiveness of Europe (vis-à-vis the rest of the world). Another focal point for lawmakers is to adopt regulation which embraces the new digital reality. Thus, challenges need to be clearly understood and objectives set accordingly. This is particularly the case in a rapidly evolving digital world. Given the European banking sector’s central role in the EU economy, it needs to stand ready to play its part in this wide-ranging transformation.