In new research on the UK’s financial space, the FinTech platform found that more than 90% of UK consumers claim a strong technology offering is important to them when choosing who to bank with. The survey, which comprised of responses from 2,000 UK consumers, stated the technology was more important than interest rates, with only 88% of respondents citing it as an important factor.
The coronavirus has increased the demand of online banking services, as people are being told to stay indoors, keeping them from visiting their branches. With the UK’s Chancellor of the Exchequer, Rishi Sunak, giving people a three-month holiday on their mortgages people have been spending hours on the phone trying to contact their bank, simply because many traditional financial institutions have no other means of communicating with customers, Vene stated.
However, there is banking technology available which would enable consumers to apply for changes with a single click and for banks to handle them internally just as easily, she stated.
With the current situation, digital banks are in a great place to acquire more customers. People are clearly looking for strong technology-based solutions and lengthy phone calls trying to contact their bank in this time could see them look towards a neo bank. However, Vene believes they need to really consider what their actual value offering means in terms of service as many offerings in the market at the moment are very similar.
“What is crucial for these banks now is to differentiate themselves by introducing more complex, new services that are easy to use and which add real value to customers. Only by doing this can these neobanks become a true banking partner for their customers (currently they may have significant numbers of customers, but these customers only use a fraction of the available services in their everyday banking).”
If challenger banks do not act fast, they will miss the opportunity. Customers are typically loyal and if incumbents do act quickly and implement strong technology, Vene believes they would likely retain their customers.
In Modularbank’s report it also found that consumers are no longer worried about the brand of a bank or creating personal in-branch relationships with staff. Only 68% of people cared about the brand and 47% of people want to have a personal relationship in-branch.
On a scale of 1-10 (with one being unimportant and 10 being extremely) 80% of consumers voted six or above when asked how important technology and a digital offering is in banking. Furthermore, 53% claimed they would be happy if they never had to visit their bank’s branch again.
People are becoming more opening to non-branded banks. Brands are not important, instead financial institution need to gain the trust of the consumer that their savings and operations are safe and secure.
“The need for physical branches becomes totally obsolete since the banking services they provide can be done more conveniently and efficiently online. This does not mean that there will not be a client manager in banks anymore, this just means that the operations that actually do not need human contact will take place without it,” Vene added.
“I personally have run several companies and handled all my personal banking over the past ten years without visiting my bank branch even once, however, I still feel that I have a personal relationship with them and my worries are all handled with dedication.”
Estonia-based Modularbank offers financial institutions with technology which can integrate with existing systems and offer seamless digital banking experiences. Vene said, “Technology really is the key to attracting and retaining a customer’s business in the banking world.”
While Vene does not believe banking will be fully digital within five years, she does see everything shifting that way. Furthermore, banking will become more embedded into our daily lives to the point where it could become “invisible” in the extent that people will not consider certain processes as banking services. She said, “This is in fact already a reality, in the form of ‘buy now, pay later’ products already offered by many retailers. To the consumer, these are retail services, yet they are still financed by banks. In the future, more and more retailers will be offering services to help finance purchases – and these will be set up and run entirely via technology.”
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