With the promise the open banking on the horizon, consumers soon will have more choice than ever before. So how do brands ensure that existing customers remain and new customers come to them? Finance specialist Stephanie Cohen explores key drivers in financial decision-making processes and what the future might hold.
Security and trust are themes that continuously appear when conducting research with consumers in the financial services sector. They are often the sole drivers for decisions within the consumer banking industry.
It’s understandable that we don’t want to put our hard earned money at risk, but our trust in digital experiences has come on leaps and bounds in recent years. In fact, trust now plays a fundamental role in digital commerce – Gartner predicts that “by 2020, companies that are digitally trustworthy will generate twenty percent more online profit that those than are not”.
We’ve become pretty trusting
As consumers, we now regularly hand our data and personal details over to providers who we trust – from retailers to price comparison sites – so long as there’s something in it for us.
Take digital banking.
While I was no early adopter of digital banking, I’ll now happily use online banking, mobile banking apps, make contactless payments and regularly make online purchases from my mobile thanks to the speed and convenience it affords me. In fact, I now find it very annoying when I can’t have the ‘all digital’ experience I’ve come to expect – and research for clients continually highlights that I’m not the only one that feels this way.
Our own research into the sector shows that 60% of consumers have banking or finance apps on their phones, and over half of these have more than one app.
So what’s the future for digital banking?
Thanks to the use of open APIs and third-party developers, open banking looks set to be the next revolution in digital banking.
Open banking offers the ability to manage multiple finance accounts with various providers all in one place. It also means that consumers will now easily be able to compare a wider range of products and get access to tailored deals based on their account behaviour. So arguably greater financial convenience than ever before.
The transparency and opportunity that open banking offers is likely to kick-start even more switching for price-led customers, who always want to save money. In fact, recent Maru/edr research revealed that 10% have switched either a bank or savings account in the last 6 months, and a further 30% have considered switching, but haven’t yet done so.
For providers, it means, even more, competition and a greater risk of customers switching. Yet failure to adopt this latest digital banking step could close off brands to a swath of new customers.
Truly uncovering the decision-making process behind consumer behaviour is therefore fundamental to the future of banking.
By understanding decisions, banks and providers can better predict the needs of both existing and new customers and offer a product, service and experience to suit.
How will consumers choose?
When it comes to switching, we found that fees and rates and trusting the provider were the two most important factors for consideration.
Trading off these two requirements can often be tricky and is something already experienced in the insurance comparison market. Consumers talk about not picking ‘the top of the table’ but instead go for something near the top but from a recognisable brand.
Both the fin-techs and traditional banks are busy working to produce the products and services of the future. And whilst some will be household names, there are new players in town. It has therefore never been more important to understand what is driving consumer decision making, especially when it comes to financial services.