67 percent of consumers surveyed have made the switch to digital; increasingly open to non- bank options
Today Oracle announced the results of a new global study that delves into consumer’s sentiment, behavior and expectations around banking. Findings from The New Digital Demand in Retail Banking report shows that banking today needs to be better integrated into customers’ digital lifestyle, providing service that is instant, integrated with social platforms, and most importantly, driven by data.
To better understand the expectations and preferences of today’s customers, Oracle surveyed 5,200 respondents from 13 countries around the globe. The survey delved into four key customer banking stages with respect to digital: opening a bank account, payments and transfers, personal loans and mortgages, and personal finance management and investment services.
“Consumers have already made the switch to digital banking for its ease and convenience,” said Sonny Singh, senior vice president and general manager of Oracle’s Financial Services Global Business Unit. “While customers are generally satisfied with basic banking services, their satisfaction drops when attempting more complex transactions such as securing a loan. Banks today must provide a more seamless customer experience or run the risk of losing out to non-banking alternatives.”
The Digital Switch is Complete
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The vast majority of consumers have moved from the traditional ways of banking, such as visiting physical branches, to primarily banking online, and are increasingly open to trying new digital platforms.
- 81 percent of consumers are using digital channels to engage with their bank
- 69 percent of respondents want their entire financial lifecycle on digital channels
- Across all four banking stages, customers listed best rates or returns and experience as the most important considerations in today’s financial decisions
- Consumers from India, China, Indonesia and Brazil ranked as the most open to trying new digital platforms, while the U.S. fell in middle of the pack at seventh. This look at “digital openness” suggests that banks operating in mature developed economies must capitalize on the digital banking lifestyle to win over customers
Mind the Gap: Fintechs make in-roads on traditional banks’ business
Trust, best rates or returns and experience are the top three most important factors for choosing a service provider. However, when consumers go into the banking lifecycle, the quality of rates and experience triumphs trust. The digital prowess of new non-bank options makes them an attractive alternative to traditional banks. As a result, banks are seeing an erosion in their core business.
- One-third of customers are looking for alternatives for personal loans and mortgages because of the unsatisfactory experience
- More than 40 percent of customers think non-banks assist them best in their personal finance management and investment needs, indicating dissatisfaction with traditional banks in this area
- 66 percent of customers say that experience is a major factor when choosing payment and transfer services, meaning consumer banks cannot afford to rest in this area
- While customers between 20 and 52 prefer opening a bank account through digital channels, young consumers between 16-19 years old still prefer non-digital channels like physical branches, likely due to lack of experience, reminding banks of the importance of face-to-face assistance
Don’t Expect Brand Loyalty
With customers perceiving fintechs and non-bank options favorably, attachment to traditional banks is decreasing. To retain their current customer base, banks need to deliver value, consistency in services and a higher standard of experience that meets the expectations of today’s customers.
- 30 percent of those who have not tried a non-bank product or platform before say they are open to trying them
- Banks are highly trusted (65%) as a financial partner but are lacking in the other considerations, such as best rates or returns and benefits, which non-banks are highly associated with
- Cryptocurrencies topped the list when people were asked what non-bank alternative they have not used but are most keen to try, followed by independent online personal finance and/or wealth management apps, and independent digital-only fintech banks
The future of banking is clear. Today’s banking customers have come to expect the omnichannel experience – service where and when they want it no matter what the platform is. The winners and losers will come down to those who embrace and accelerate change to serve their customers.