A study by Deloitte of more than 5000 respondents across 41 countries has found Luxembourg below average in its digital banking services Jobs.lu

A study by Deloitte of more than 5000 respondents across 41 countries has found Luxembourg below average in its digital banking services Jobs.lu

Despite Luxembourg’s reputation for sharp financial innovation, retail banking customers in Luxembourg have a poor experience compared to other countries -- with even basic functionality such as online account opening missing.

Say ‘Luxembourg’ and most people will think of its world-famous “Finanzplatz” and significant assets under management (€5.9trn in Luxembourg-domiciled investment funds as of the end 2021). However, within this great ocean of finance a small fish risk is being forgotten: the retail banking customer, whom, at least in digital terms, suffers from a user experience far below the global average.

“[Luxembourg banks] need to invest more, especially in the most critical client journey to improve the user experience, and keep up with worldwide competition,” explained François Bade, banking partner at international consultancy Deloitte Luxembourg.

According to Deloitte’s study , Luxembourg’s digital banking efforts rank 25th out of 41 countries.

And, despite a growing demand for e-banking services, pegged by the Luxembourg Bankers Association ABBL at 5% a year for retail customers, the gap between Luxembourg’s five retail banks and the banks identified by the study as global ‘digital champions’ has actually widened since Deloitte’s last study on the matter in 2020.

Meanwhile, the digital maturity of Luxembourg’s banking sector remains below the global average, at 39% against a global average of 42%.

For the experts, this is a wake-up call for retail banks to invest more in their technology.

“A seamless and fully remote account opening as well as the increased integration of banking apps to enable smooth personal finance management should become standard,” said Bade.

What is missing

Digital progression and the covid pandemic means that banking customers globally no longer want to carry out their transactions in a branch. “The pandemic has really changed things,” said Fred Giuliani, head of digital technology at Luxembourg bank Spuerkeess. “The banking experience isn’t how it was in 2019 and the mobile device plays a crucial role.”

Romain Girst, head of retail banking at BGL BNP Paribas, agreed: “The pandemic has accelerated a number of customer behaviors that we’d seen develop in previous years, leading to a considerable increase in remote interactions, mobile payments, and e-commerce transactions.”

A study by ABBL, published on Tuesday, found that “the number of transactions made in branch [last year] continued to fall significantly (-9%) whilst e-banking transfers increased.”

Yet Luxembourg’s retail banks have been slower than most to respond.  According to Deloitte’s study, only two out of the five retail banks in Luxembourg (40%) allow customers to open an account fully on line, versus an average percentage of 70%. in the global study.

BGL BNP Paribas is one of these. Since May 2021, the bank has offered video identification to retail clients for online onboarding, which means that accounts can be opened remotely with no need for clients to attend branches in person.

The Deloitte study also highlighted that only one Luxembourg bank allows aggregation of several bank accounts into a total financial balance and visibility of history across all accounts. Spuerkeess is unique among Luxembourg banks for aggregating multiple bank accounts into one platform with a total financnial balance and visibility of history across all accounts.

BGL BNP Paribas also offers clients a 360° view of their finances via the BGL BNP Paribas Web Banking app, with a global overview of their BGL BNP Paribas bank accounts and those held at other banks in Luxembourg as well as two neobanks. It claims it will extend this offer banks in Belgium and France in the coming months.

Investment in technology

Nonetheless, Deloitte has called for Luxembourg banks to invest more in the digital transformation. According to Giuliani, Spuerkeess has invested heavily in its digital technology. “We’ve put a lot of focus on app and web banking. We will continue to focus on these investments - all Luxembourg banks have invested heavily in retail customers,” he added.

“The mobile app plays crucial role and old banking products need to be adapted to be consumable in digital way.” “BGL BNP Paribas is stepping up investments into digitalisation and new technologies,” said Girst. “This includes developing new and innovative ways of serving our clients.”

Deloitte also found that customers increasingly want banks to be more than just banks. “Today’s banking clients expect their banks to offer services that cover multiple areas of their day-to-day life,” said Pascal Martino, banking leader at Deloitte Luxembourg.

In order to do this, Spuerkeess collaborates with Luxembourg Fintechs to offer a range of services to the customer outside pure banking, one example being a collaboration with a Luxembourg-based Fintech to create an integrated solution to pay taxes direct to the government.

Another is collaboration with the Luxembourg government, allowing students to accept their student loans directly through the Spuerkeess banking app S-net, rather than receiving a government letter and taking it to the bank to apply for a loan.

“Fintechs are not competitors they are collaborators,” said Giuliani. Paradigms are also shifting in terms of what customers should expect as ‘normal,’ said Giuliani. “Being paid immediately is something that of course a bank can charge for, but for us it’s just a basic service. Customers expect it and it’s the new normal.” Deloitte consulted over 5,000 respondents across 41 countries for the study.

Luxembourg retail banks Banque International a Luxembourg and ING were not able to comment to Delano at the time of publication, while Raiffeisen and Credit Agricole did not respond to requests for comment.