{"id":51803,"date":"2024-12-01T11:32:29","date_gmt":"2024-12-01T10:32:29","guid":{"rendered":"https:\/\/www.accuracy.com\/?p=51803"},"modified":"2025-02-24T11:40:01","modified_gmt":"2025-02-24T10:40:01","slug":"retail-banking-in-france-a-model-in-flux","status":"publish","type":"post","link":"https:\/\/www.accuracy.com\/en_gb\/retail-banking-in-france-a-model-in-flux\/","title":{"rendered":"Retail banking in France: a model in flux"},"content":{"rendered":"
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For many years now, retail banking in France has been under attack from new digital banks. Until recently, these players were only able to win over remote customers who generate little in the way of profits. But over the past two or three years, digital champions have emerged and become a real threat to traditional banks, capturing more and more primary bank customers.<\/p>

Online banks, the new champions of local service <\/strong>(<\/span>post LinkedIn<\/a>)<\/span><\/p>

As we all know, physical networks still account for a much larger proportion of the retail banking distribution model in France than in the rest of Europe (50 branches per 100,000 inhabitants compared with an average of 20 to 25). This is partly due to the local DNA of the three players that dominate the French market. However, an ageing population and growing digitalisation are making this characteristic less and less advantageous.<\/span><\/p>

There are several reasons for this. Firstly, the development of online banks, providing products that are increasingly comparable to those of the traditional banks, is attracting a customer base that is used to autonomy. At the same time, the sharp decline of in-branch interaction is working against the physical networks. By focusing on responsiveness and efficient digital channels, online banks are gradually redefining the notion of proximity in customer relations.<\/span><\/p>

Nevertheless, the French branch model remains resilient, not least because lending, the cornerstone of the bank’s drive to win over its core customer base, still favours face-to-face banking.\u00a0 However, traditional banks need to accelerate their digital transformation if they are to remain competitive.\u00a0 While online actors play the simplicity card, physical banks must continue to reinvent their interactions if they are to maintain their positions in the future.<\/span><\/p>

Revolut France, now offering mortgages <\/strong>(<\/span>post LinkedIn<\/a>)<\/span><\/p>

In the French retail banking market, a mortgage loan is a product like no other. It is a key tool for traditional banks to implement their customer acquisition strategy, with nearly one in two new customers being captured by granting them home loans. This harpoon effect partly explains the relatively low margins in France compared with other European countries: generally, less than 0.50% in France compared with more than 1% in Europe.<\/span><\/p>

New players in retail banking have historically opted for other means of capturing customers: attractive rates on everyday banking, welcome bonuses and a supposedly superior customer experience. However, these are not enough to attract the traditional banks\u2019 favourite customer: the primary bank customer, who, on average, generates between three and four times more income than their secondary or remote equivalents.<\/span><\/p>

Revolut has embarked on a process to extend its product range, which now includes mortgages. In doing so, it is pursuing its ambition to become the primary bank for its customers. With a promise of loan offer within 24 hours based on data, the neobank plans to shake up an area that is often considered perfectible. The challenges, particularly those of risk management, are not insignificant, but it is a key step on Revolut\u2019s road to success.<\/span><\/p>

BoursoBank\u2019s business model wins the jackpot <\/strong>(<\/span>post LinkedIn<\/a>)<\/span><\/p>

Within the retail banking ecosystem in France, BoursoBank stands out. After flying under the radar for quite some time, the online bank has experienced a stunning acceleration in its development. Until 2017, BoursoBank was growing slowly but surely, adding around 250,000 customers a year. Then, thanks to a sharp rise in acquisition spending, its pace of growth accelerated considerably, recently reaching 1 million customers annually.<\/span><\/p>

Now with a customer base of over 7 million, BoursoBank faces a new challenge: transforming its enormous base of secondary customers into primary customers, the most loyal and profitable category, with unit revenues three to four times higher. To do so, the online bank will have to continue depending on its strengths: aggressive and effective marketing and attractive pricing.<\/span><\/p>

For traditional banks, BoursoBank could pose a real threat. The online player has captured roughly 25% of the new business won by French banks in the past two years. Against a backdrop of weakness in the property market, the main and traditional vector for new business, the major French players are finding it difficult to renew their customer base, which in the long term poses real problems for revenue growth.<\/span><\/p>

Nicolas Darbo, Partner, Accuracy<\/strong><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>","protected":false},"excerpt":{"rendered":"

For many years now, retail banking in France has been under attack from new digital banks. Until recently, these players were only able to win over remote customers who generate little in the way of profits. 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