Luxembourg’s financial sectors could be set for a shake-up as customer preferences are evolving and the market position of banks is changing. Moreover, digital-first regulations like the revised Payment Services Directive (PSD2) will remove barriers between national markets and allow new entrants with stronger digital competencies to challenge incumbents for market share.

This and other findings about the digital capabilities and readiness of EMEA’s banking sector were the result of Deloitte’s EMEA Digital Banking Maturity Study, a comprehensive analysis of the digital competencies and market situation in 38 countries, encompassing 238 banks and 10 FinTechs.

What makes a digital champion?

A team of 136 “mystery shoppers” opened current accounts and evaluated each bank’s internet and mobile banking channels to map their offering against 826 functionalities. In parallel, a customer survey was conducted, of more than 8,000 clients of banks in the same 38 countries, to understand customer needs and preferences for each market, and to be able to map each bank’s functionality against consumer expectation in their market. These were supplemented by an evaluation of mobile user experience (UX) by customers according to the User Experience Questionnaire (UEQ) framework.

Status quo no longer an option for Luxembourg banks

Despite some pressure on the banking market, the digital maturity of Luxembourg banks is still lower than the European average, being classified as a “digital adopter” instead of leading the way. Many still have not addressed the digitization pressures from customers and competitors.

“With a rather homogenous digital offering, and solid day-to-day banking functionalities, banks in Luxembourg still have room for development to deliver a complete digital banking customer experience. We encourage the local players to review their digital strategies in order to keep up with the rising appetite of digital consumers,” says Pascal Martino, Partner and Banking Leader at Deloitte Luxembourg.

How to prepare for the future

Both banking incumbents and FinTechs will need to answer two key questions as they prepare for the future: What role do they want to play beyond their traditional/core business? What role do they want to play in the emerging post-PSD2 Open Banking/Beyond Banking ecosystem?

Ronan Vander Elst, Partner at Deloitte Digital Luxembourg provides a solution. “Banks need to get the full picture for their market positioning so they can understand their next course of action. Whether they should be spending their time and resources on excelling end-to-end on selected customer journeys or only on part of them will determine their future market positions.”

Learn more about the EMEA Digital Banking Maturity Survey results here: https://www2.deloitte.com/lu/digital-banking-maturity