In Europe, digital-native challengers like neobanks and direct banks are reshaping customer expectations by offering seamless, user-friendly digital experiences, which traditional banks often fail to match.

A new survey by Backbase, a Dutch banking software fintech company, revealed that nearly half of traditional bank customers would be more satisfied with enhanced digital services, with customers increasingly demanding personalized financial tools, simplified financial management tools, and improved app support experiences.

The survey, which polled more than 6,300 online banking users across 13 European countries, explored consumer preferences and behaviors related to digital banking, investment habits, and satisfaction levels. It found that digital offerings by traditional banks often fall short of customer expectations, with many customers indicating that improvements would significantly increase their satisfaction.

Nearly half of respondents (47%) said they would be more satisfied if their bank offered more digital services. This sentiment is particularly strong among customers of traditional banks (48%), in contrast to 40% of direct bank customers and 38% of neobank customers.

Neobanks are digital-only banks that leverage innovative technology to offer streamlined and often niche financial services. Examples in Europe include Revolut, Bunq, and N26. Direct banks are banking institutions which operate without a physical branch network. These banks offer their services only via the Internet, mobile app, email, and other electronic means, such as telephone, online chat, and mobile check deposit, focusing on ease of use, cost efficiency, and self-service.

Notably, a significant portion of customers reported switching banks due to dissatisfaction with service quality, illustrating the urgent need for banks to modernize customer experience or risk losing users to digital-first challengers.

26% of respondents said they had already changed banks for this reason and would be willing to do so again. Additionally, around 10% are currently planning to switch providers due to continued dissatisfaction with the service offered by their main bank.

Enhanced digital services and new offers

The survey also showed that customers increasingly expect banks to go beyond traditional offerings, and deliver personalized and seamless digital experiences.

In particular, 59% of respondents want tailored financial recommendations based on their individual needs, reflecting a growing demand for intuitive banking experiences; 57% expect banking apps to detect international travel automatically and enable payments and cash withdrawals abroad; 52% want quick answers to simple questions via integrated in-app chat features; and 50% want tools to manage subscriptions, including the ability to cancel services like Netflix or Spotify.

Customers are also looking for features that simplify financial management and which integrate seamlessly into their lives.

47% want the ability to apply for products like loans or credit cards digitally; 41% want apps to display nearby ATMs; 28% want spending analyzers and actionable insights; and 18% want digital investment options integrated into banking apps.

These findings highlight win-win opportunities for banks to boost revenue, especially with products including digital lending and digital investments, while also improving convenience.

The European financial landscape has changed drastically over the past years, with cash usage plummeting and digital payments gaining in prominence. The 2025 Payments and Open Banking Survey by Strategy&, the global consultancy of PwC, revealed that only 23% of the 5,500 European consumers polled in 2024 preferred cash.

The figure represents a significant decline from 2022 (37%), and 2018 (43%). At the same time, preference for digital and electronic payment methods increased, with payment cards rising 16 points from 46% in 2018 to 62% in 2024, and digital wallets rising 4 points during the same period.

Demand is also growing for open banking, with 63% of European respondents reporting willingness to share their banking data in exchange for benefits including discounts or additional services. In Germany, half of them indicated being. open to an open banking model.

Though digital-native challenger banks are gaining ground in Europe, traditional banks continue to dominate the sector. Of the 6,300 online banking customers surveyed by Backbase, 82% identified a traditional bank as their main banking provider, while 13% indicated a direct bank, and a mere 4% named a neobank.

Featured image: Edited by Fintech News Switzerland, based on image by RSplaneta via Freepik