Banks have cited customer loyalty as their main concern, according to a survey by financial services firm Temenos.
The report showed 30% of banks said keeping customers was their biggest challenge, with retail banks showing more concern over losing consumers than corporate banks.
David Arnott, CEO of Temenos, explained that new market entrants such as Amazon are giving younger, more fickle customers what they want, using innovative technology solutions to tempt them away from their current account or have several accounts with lots of different firms.
“In 1980 only 3% of customers changed their bank account. Last year it was 12%, so it’s changing very, very fast,” he said.
As the number of payment and banking services increases, banks are becoming more wary of other players entering the market. Of those surveyed, 23% said they considered competition from technology firms – such as Apple and Google – a threat to the banking industry.
Apple recently announced plans for its own mobile wallet, Apple Pay, so users can pay for goods via contactless near-field communications (NFC). Social networking sites Facebook and Twitter are also experimenting with purchasing and payment capabilities.
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Banks are investing in new products to keep customers loyal, with 26% of retail banks citing product innovation as their main investment priority over the next year.
“They want to be innovative and they want to take products to market as quickly as they can," said Arnott. "They need digital channels so they can get to customers – creating more touch points with the customer than they currently have.”
However, although outwardly banks are investing in new creative technologies, internally they still rely on decaying legacy systems.
Firms are slowly incorporating technology, with 86% of those asked hosting at least one application in the cloud. However, security is still a concern amongst financial firms, with 38% stating that data safety is preventing widespread adoption of new technologies such as cloud.
"New entrants coming in, fickle buyers and regulators are putting more pressure on banks. A combination of those is causing some major issues for banking," said Arnott.