Financial Services

Whose Customer Are You? The Reality of Digital Banking in North America

January 09, 2019

North America

January 09, 2019

North America
Renée Friedman


Renée Friedman joined The Economist Group in July 2016 as a Managing editor for EMEA.  Her work focuses on thought leadership programmes for the financial services sector.

Prior to joining The Economist Group, Renée worked in a variety of roles: in Economic and Political risk consulting, in finance in the City of London as an Economist, a Macro strategist and a Bond fund manager,  in the  international and UK domestic policy spheres as an Economist to the Treasury Select Committee at the House of Commons and as Senior Economist and Chief Technical Advisor for the UN Development Programme’s (UNDP) Regional Bureau for Europe and the CIS,  and as an academic, designing and teaching economics courses at universities across London.

Renée has spoken on a variety of panels  and events focused on Russia, Ukraine and other emerging market economies including those for BNE Intellinews, IHS Global Insight, the IMF Poverty Reduction Strategy meetings, and for the UNDP. She has also appeared on CNBC.

Renée holds a PhD in Economics from London Business School, a Masters in Russian and East European Studies from the University of Birmingham, and a Bachelors in International Trade and Development from the London School of Economics & Political Science.  She is also a Prince 2 certified project manager. In addition to her native English, Renée speaks Russian.


North America: conquering the next frontier

People now expect more from their bank than they did even five years ago. As North Americans become ever more used to turning to the digital world for all aspects of their lives, the need for banks to make their online service offerings as good as their offline services, eg, mortgages and pension planning, seems obvious. These changing customer behaviours and demands should be fuelling change in the services and products retail banks offer their current clients. It should also be influencing their thinking in how they reach out to new clients.

However, according to interviewees, despite the global prominence of Silicon Valley digital giants like Google and Facebook, the ability of US banks to provide an easy, one-stop digital journey is still underdeveloped compared with their European counterparts. North American respondents recognise the importance of product agility; 49% of retail bankers (as shown in Chart 6) cite product agility as a strategic priority for their companies. More North American bankers may believe (87%) that the platformisation of banking and other services through a single entry point will steer the market than their global counterparts (78%), but they haven’t quite been able, for a variety of reasons, to fully utilise their home-grown technological prowess to their advantage.

These same bankers are pushing hard for a niche proposition for their own customers, with 71% of respondents citing this as the way they see their current business model evolving. North American survey respondents remain focused on their current markets and, as open banking has only begun to be part of the conversation, are less open to building national or multinational open digital ecosystems to populate their platforms. At present, they are not particularly keen on enticing outside developers, with only 43% looking to build a digital ecosystem versus 53% globally. But this may change as North American banks, particularly those with a global footprint, learn from Europe’s open banking experience.

An earlier mover advantage in payments


Payments have become, for many, the way they interact most with their bank. Unlike many American banks, this was something that Canadian banks realised early on. Canadian banks quickly moved into industry e-payment solutions while the US still relies on competing private-sector technology.

Because there is no federal ID system in Canada, Canadians can also use their banking credentials to access online government services like immigration or the tax authorities. The banks want to take this further, formalising and tokenising banking customer identities with the assistance of government agencies.

Despite Canada’s more apparent willingness to embrace change, both nations need to fast track their regulatory and infrastructure upgrades if they are to remain appealing to their customers. This is especially important as new payment players are seen as the biggest competition in the years to 2020 by 61% of North American bankers.

However, North American bankers seem far more relaxed that their more profitable product lines can weather the rise of fintech. Only 9% of North American bankers think there will be an assault on top-end discretionary management, the lowest percentage of all regions surveyed.


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