Could implementing these features boost banks' customer retention?

What do consumers want from digital banks?

According to research from Latinia, the vast majority of banking consumers want high quality digital services that are convenient and easy to access. And, 76% are willing to switch banks for a better experience. 

We've kept this in mind when selecting the 7 feature categories for our analysis:

1. Accounts, specifically foreign currency accounts and the ease of opening a savings account
2. Junior accounts
3. Money transfers, specifically instant P2P transfers using just the recipient's cell number
4. Cards, specifically virtual cards, disposable cards, and loyalty schemes
5. Wealth management, specifically the ease of opening an investment account and self-directed investing without minimum initial investment thresholds
6. Support chatbots
7. Credit products, specifically salary advances, instant loans, and credit cards

Needless to say, this isn't a complete list of the features every digital banking app should have. Nor is it intended to be one. We've chosen these seven categories because we believe they offer ease and convenience to a broad range of consumers with differing financial circumstances and priorities. 

Our sample was made up of 158 firms:

• 87 US banks, credit unions, and challengers
• 53 EU banks and challengers
• 18 UK banks and challengers

The big picture: Which are the most and least common functionalities across the US, EU, and UK?

Out of the features in all seven categories we looked at, the most widely available, by far, is online customer support via chatbots, with 53.16% of firms offering it. 

This is followed by instant P2P transfers using the recipient's cell phone number — 51.27% of the firms in our sample have this capability — with applying for a credit card online coming in third at 37.34%.

The least common feature overall is the ability to create disposable virtual cards (2.53%) — online-only cards with details that expire after one purchase. Foreign currency accounts are the second least common feature (6.33%).

Given the rising incidence of card testing attacks — in which fraudsters steal card details then make small purchases with them to check whether they still work — it's baffling that so few banks offer disposable virtual card capabilities, which would make online transactions more secure. 

Similarly, with the value of cross-border retail e-commerce transactions expected to reach $7.9 trillion by 2030, and the travel industry headed for a record-breaking year after the Covid-19 slump, the dearth of foreign currency accounts is a huge missed opportunity. 

That said, the fact chatbots are so widely available doesn't necessarily mean they're hitting the mark in terms of meeting consumers' expectations.

In a deep dive on banking chatbots we conducted earlier in 2024, we found that precious few use AI and other advanced technologies. The vast majority are more accurately described as interactive search tools, with some of them able to answer basic queries. 

Insights by region

Looking at the three regions in our sample individually, each have their own strengths and weaknesses. 

US and UK firms are both strongest on chatbots, with the UK slightly ahead: 66.67% of UK firms offer chatbots, while 57.47% offer them in the US. By contrast, less than half of EU firms (41.51%) have chatbots. 

The EU, on the other hand, leads the way on instant P2P transfers using the recipient's cell phone number, with 62.26% of firms offering it. At 55.17%, it's the second most common feature in the US after chatbots. In comparison, no UK bank or challenger has the capability.  

The US is weakest on foreign currency accounts, with none of the banks, credit unions, or challengers in the sample offering it. But at 15.09% and 11.11% respectively, the EU and UK aren't doing much better. 

Alongside P2P transfers, UK firms also lack disposable virtual card functionality. Again, the US and EU don't do much better: only 5.66% of EU firms and 1.15% of US firms have the functionality.

No UK or EU firm offers salary advances, while 36.78 % of US firms do. US firms are also stronger on credit card applications — 41.38% compared to 33.33% in the UK and 32.08% in the EU. 

Some trends cut across all markets. 

Case in point, while, with 27.87% offering some functionality, UK firms are relatively stronger on junior accounts than EU (13.21%) or US (9.2%) firms, it's still just over a quarter of the sample, meaning consumers have limited choices. 

Similarly, given the potential for loyalty schemes to boost engagement and retention, we'd have expected higher uptake. But less than half the sample — 35.85%, 21.84%, and 38.89% in the EU, US, and UK respectively — offer them. 

There are plenty of gaps. Will EU, US, and UK banks and fintechs step up and fill them?

As of 2024, there are 4,577 banks operating in the US, 4,886 operating in the EU, and 357 in the UK. And that's excluding neobanks, which, the Payments Association predicts, will enjoy a user adoption rate of 22.8% over the next five years. 

The good news is that, despite the tough competition, it's possible for both banks and challengers to stand out, without having to reinvent the wheel. 

It's simply a question of looking at what's missing in the market and swooping in. 

Disposable virtual cards and foreign currency accounts are by far the biggest market gaps. But there are plenty of functionalities that, while available, are rare, particularly junior accounts, no-minimum investment accounts and self-directed investment, and instant loans. 

Put more bluntly, the opportunities are right there. Banks and challengers just have to take them. 

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