Other parts of this series:
One of the clearest impacts of the pandemic has been to accelerate consumers’ long-running migration to mobile and online channels, for financial services among others. For banks and insurers, the results include greater opportunities to serve more customers in new and more efficient ways.
Our four customer personas
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But consumers’ switch to digital could be double-edged for providers. Why? Because as customers move online for their financial needs, one effect could be to make the relationship more distant and transactional – thereby increasing commoditisation and jeopardising the trust that underpins firms’ licence to operate.
Blending human and machine
However, these negative impacts are by no means inevitable. Our experience shows that banks can avoid them by creating a customer experience that blends the speed, efficiency and convenience of digital with the emotional engagement brought by human personality and expertise.
The power of this combination is underlined by our recent Banking Consumer Study: Making digital more human which surveyed more than 48,000 financial services customers globally, including 3,000 in the UK. As in previous years, we’ve focused the study around four customer “personas” – Pragmatists, Traditionalists, Pioneers and Sceptics – and tracked changes in behaviour across and within them.
The findings provide some great insights into which behavioural shifts are likely to endure well beyond the pandemic. And we believe these insights can be valuable inputs into the thinking of firms across the industry, as they decide where to focus their efforts – and set about designing offerings for an ever more digital future.
Switching, personalisation, bundling and trust
So, what does our research tell us about the UK financial services customer? Overall, it reveals findings in seven key areas: I’ll cover the first four in this blog post, and the remaining three in my next one.
Arguably the most striking findings are around switching. Of the one in five UK customers who opened a new account in 2020, only 4 percent switched their main account provider, down from 9 percent in 2018. In other words, in most cases, the new openings were of supplementary accounts. Interestingly, pioneers slowed their switching the most, from 25 percent to 8 percent. Less surprisingly, the most active switchers were 18-to-24-year-olds, at 11 percent.
What’s happening? Looking across all the personas, it seems the pandemic has made everyone slightly more reserved about changing providers or disrupting existing relationships, given worries over the economy, jobs and mortgages. In other words, the desire for stability amid COVID-19 has generated a mood of “look before you leap” that may fade away only after certainty returns.
Our second set of findings relate to priorities and personalisation. While most consumers still prioritise value for money and convenience, since 2018 there’s been a 45 percent increase in interest in personalised advice – accompanied by a sharp rise in interest in personalised digital experiences, from 10 percent to 30 percent. Combining the two, it becomes apparent that what people are looking for is help making their money go further: 62 percent said that the most appealing attribute of a bank or insurer’s digital offering would be personal advice on how to save money.
Next is data trust – and here our findings indicate both opportunities and risks. In 2020, consumers were 15 percent more willing than in 2018 to share data with their banks and insurers – with pioneers in the vanguard. In line with our findings above, “Advice relevant to your personal circumstances” emerges as the most popular potential benefit of sharing data (89 percent). And the risks? Consumers are still worried about intrusive use of their data, which is the top reason for not sharing it, highlighted by 53 percent.
Our fourth set of findings indicate strong demand for bundled services. More than half of UK respondents – 55 percent – are willing to pay for bundled products, a figure that rises to 73 percent among pioneers in the 55 – 64 age range. Pragmatists are also keen, strengthening the view that this could be a profitable focus area for banks.
Completing the picture
The overall message from our first four sets of findings? Low levels of switching suggest customers are currently broadly satisfied with their banks, albeit natural caution amid the disruption wrought by the pandemic has also played a role. But with adoption of digital services increasing and demand for more human and personalised digital experiences rising, no provider can afford to rest on its laurels.
In my next blog I’ll complete the picture by looking at our findings on the final three areas. And I’ll bring all of them together to map out how UK banks can give customers the human digital banking experiences they want. Stay tuned.
Special thanks to Hayley Taylor and Graeme Smith, who contributed to this blog.
