GEC NEWS WIREBain & Company, in its eighth annual retail banking study, partnered with Research Now to survey more than 133,000 consumers in 22 countries. It found that across most countries at least half of respondents said they are open to buying a financial services product from a technology company. This is particularly true in countries where the banking experience is more time-consuming and cumbersome. For example, in India and Mexico, 91% and 81% of respondents, respectively, expressed a willingness to run their finances through major tech firms. Interest is similarly high in countries that have long used non-bank payment systems, such as in China, where many consumers conduct financial transactions via WeChat. Here, 88% of consumers said they would bank with a tech firm.
Technology companies have also earned a high degree of trust with consumers, according to the survey. Among U.S. and U.K. consumers, specifically, PayPal and Amazon rank nearly as high as banks for trust with their money.
“Fintechs have innovative products, but they struggle to build brand recognition or a distribution model that attracts many customers,” Julien Faye, Head of Bain’s Financial Services Practice in the Middle East. “On the other hand, large technology firms already have digital prowess, established brands, and customer access, which provide an almost unassailable advantage in extending their corporate brands into banking. Many also already sell payment services, credit cards and loans, so it’s plausible they will offer a suite of retail banking services in the near future.”
Bain’s research finds that routine transactions done online or through mobile cost 20 times less than those that require bank staff. In Mexico, for instance, the top five banks have an opportunity to take out more than $500 million in cost from traditional branch and phone channels by performing at the best domestic and international benchmarks.
But banks still have far to go. Most survey respondents said banking apps and websites fall short of being convenient, multi-functional, and easy to use. Only 45% of U.K. respondents said their primary bank’s website lets them do everything they need. The share is even lower for banks’ mobile apps.
On the surface, it appears that mobile banking has plateaued. The reality is that consumer usage of banks’ mobile apps has stalled. However, mobile usage of non-bank apps for financial transactions is actually on the rise. In China, for example, where mobile usage is enormous, 91% of respondents said they had used a third-party payment app, with the average user making nearly 10 payments over a seven-day period.
Traditional banks have also barely touched some of the other technologies that have reached a tipping point in consumer markets. Specifically, virtual reality and personal voice assistants, such as Alexa, Siri and Google Assistant, have the potential to supplant bank call centers. In the U.S., more than one-quarter of respondents said they would consider using voice-controlled assistants for their everyday banking.
