The Story Behind the Numbers: Retail Banking Trends in Italy

As part of our 2024 Consumer Banking Report, we surveyed 9,000 consumer bankers across North America, Europe and Asia to understand their attitudes and expectations of their retail bank – 1,000 of those consumers came from Italy.  

While there were certainly consistencies across many topics in all the regions we surveyed, there were several interesting outliers in Italy, including higher rates of consumer distrust and lower rates of mobile and web-based banking.

That’s why, to build a complete picture of banking trends and customer expectations in the region, we caught up with Sandro Vinetti, EPAM’s Director of Digital Engagement in Italy.

Based on analysis of the data we gathered, Italy had the second lowest reported rate of happiness among bank customers, with only 80% of respondents claiming to be happy with their primary bank. What factors might be driving this?

SV: Italian customers are quite skeptical of banks, especially because in the last few years there were some big banks that collapsed and made waves around the country – a subset of investors basically lost their life savings. For many customers, these bank failures are still top of mind.

That said, there’s an interesting dichotomy in banking in Italy. As a country, Italy has the second oldest population in the world, after Japan. 

I mention this as banking here is driven largely by relationships, which the older population are more inclined to leverage — many people here have long-term relationships with their local physical branches, especially in small cities or villages. 

They personally know the people that work in the banks, and they have a strong personal connection with them. So, while people here aren’t particularly happy with banks as an institution, they trust the people they’re engaging with.

It’s interesting you mention trust. Trust in banks was actually the lowest in Italy out of all the countries we surveyed. 59% of respondents in Italy claimed to trust banks in general, whereas the global average was 70%. What factors might be driving this distrust and what steps should banks take to win it back?

SV: Apart from the failures we just touched upon, there’s also a lack of transparency which I think might be driving this – addressing this will go a long way toward winning back consumer trust. Banks need to be more transparent around the fees they charge consumers as well as around their own cash flows as an organization. These need to be better communicated to the public.

Recently, I was speaking to a colleague of mine and he mentioned he had closed an account at a bank only shortly after opening it. He was charged a variety of hidden fees and expenses that hadn’t been disclosed to him only a handful of days earlier when onboarding. Even weeks after, he still has to pay for something that he didn't agree to subscribe to. 

That touches on something interesting we saw in this research. In Italy, 38% of customers said they'd be willing to switch banks in the next 12 months. In your opinion, why are customers so willing to switch and what steps do banks need to take to improve customer loyalty?

SV: Given the high-profile failures we saw, it’s easier right now for customers to trust the big banks to manage the bulk of their finances, and much of this willingness comes from customers looking to move to what they perceive as more stable institutions. 

Customers are willing to use the neobanks for payments, moving funds arounds and other simple conveniences. They’re happy to leverage new and emerging FinTech services, but they’re hesitant to move all their eggs out of what are perceived to be the “safe” baskets. 

Then, we get into the demographics conversation, again. Brand loyalty is very much a generational issue, in that younger generations are more eager to switch banks or try out new digital payment services, so they’re more willing to move to banks that offer the services that align with their needs. In this research, we saw 43% of those aged 18-34 willing to switch banks versus just 32% for those 55+. Older generations want the security of a large, “too-big-to-fail” type of bank, especially if it offers access to a physical branch where they can speak to someone they trust.

That said, we are seeing some changes in the traditional banks trying to fill this gap by creating sub brands targeted at delivering new digital experiences bolstered by the perceived stability of the parent bank. 

Let’s dig into those digital services. What we saw in Italy was very much an outlier in term of utilization of mobile banking or use of the bank’s website. Only 44% of the customers surveyed said that they use one of these channels on a weekly basis, which was the lowest out of anywhere we looked at, with a global average of 54%. What might be driving these lower usage rates?

SV: There are two major factors at play. As we’ve touched on, part of this is the result of an older population — they’re just not as eager to adopt new digital services. The second factor is that I don't think many Italian banks offer a great digital experience yet — either they’re not seamless, they’re slow or just not intuitive.

When you're going through some of the more important moments of your life — applying for a mortgage, loan or anything where there's a big sum of money involved — then you need to have great digital experiences capable of meeting those moments. Some of the bigger banks are actively addressing this, but for the smaller, regional banks, it’s going to be a long journey.

Banks need to be at the forefront of innovation with digital experiences. But at the same time, they also need to meet the current needs of the population, which, as noted, have reservations against embracing digital channels. As such, demand for the physical branch experience isn’t going away any time soon here in Italy. 

I believe the research here showed 82% of customers used a branch in the last year, but more telling, 43% do so at least monthly.

This is a big challenge because of course it's not easy to be consistent and strong on both fronts. For banks to be successful here, this is what they need to do: Provide innovative digital tools and services for the customers who will utilize them while continuing to offer personalized branch experiences for the large segment of the population that favors banking in-person. The banks that properly strike this balance will find themselves with a competitive advantage. 

To that extent, I think the larger banks currently focusing on digital services need to reconsider their branch experience and how they differentiate themselves here, whether it’s offering assistance in real estate, appliances or elsewhere. How can they drive local engagement? And similarly, the smaller local banks need to look at their digital portfolios to ensure they’re keeping pace with the increasing demand for digital services being driven by younger generations, so they’re geared to win these customers and grow share of wallet.

To learn more about consumers’ behaviors and attitudes toward everything from AI to instant payments, download the report here.