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What European consumer finance executives expect for 2018

Growth in excess of 5% and not much concern over digital players like Google, PayPal or Apple: according to 118 consumer finance executives from 21 European countries, surveyed by Roland Berger and Eurofinas, the next two years look quite bright. But given the challenges in consumer finance – declining margins, tougher competition and the need to transform to a digital business model – it’s safe to say not all players will benefit from the opportunities ahead.

If we zoom in on the Dutch respondents, 75% of executives anticipate growth in excess of 5%, but 67% predict declining margins. Why? Because 60% of them expect regulatory changes (insurance cross-selling regulation, privacy restrictions, ECB/central bank regulations) to considerably impact their businesses in a negative way.

As for the competitive playing field, digital banks (80%), online brokers and comparators, and retail banks (60%) are expected to be the biggest threat to incumbent players. Peer-to-peer lending platforms, though, don't worry executives one bit. They have also not put Google & Co very high on their watch lists: 80% do not believe that the tech giants will become major competitors in the near future.

Which is not to say that digitization is unimportant. We also asked the executives about the need for transformation, and they listed the following priorities:

● Massive digitization: 40% of executives expect 60% of all contracts to be digital by 2018. Operations digitization will be a new normal rather than a differentiator, and the use of big data will be inescapable
● This massive digitization needs to go hand-in-hand with complex workforce rightsizing and physical network restructuring
● Value propositions to counter the banks and online players with broader client relationships must be developed

How to go about tackling these priorities? In our study “Future of European Consumer Finance” we take a quick look at some of the available tools, such as a new way of segmenting customers or big data success factors.

Mar 22, 2016
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