Study: Upheaval in the banking sector

 

A recent consumer study by Entrust shows the preferences of modern bank customers: above all, advanced online banking functions and increased payment security are desired. […]

88 Percent of respondents said that they prefer to do their banking business in some form online – digital banking is the new norm. (c) Unspalsh

The digital transformation of banking and payment transactions has accelerated worldwide in recent years, the industry has undergone massive changes – most recently driven by the global pandemic. During this critical time for banks and credit institutions, Entrust examined how this upheaval affects consumer preferences and habits. The results were published in the study “The Great Payments Disruption”.

According to a press release, Entrust surveyed 1,350 consumers from nine countries for the study, including the United States, Canada, the United Kingdom, Germany, Saudi Arabia, the United Arab Emirates, Singapore, Australia and Indonesia. The results paint a picture of the current status quo and a possible future of the banking sector.

“The study underlines that digital transactions are becoming more and more important for bank customers – but that at the same time there is also a growing awareness of security issues around online interactions,” explains Uwe Jaspers, Vice President Financial Secure Issuance Sales EMEA at Entrust. “Consumers expressed both an overwhelming preference for online banking, as well as a significant concern about fraud. In fact, more than two-thirds of all respondents have already changed their bank or credit union after receiving a fraud or privacy warning. Financial institutions need to combine convenient digital experiences with highly secure protection measures to strengthen consumer trust and loyalty.“

Entering a new banking age

  • Omnichannel touchpoints are becoming increasingly important: 88 percent of respondents said that they prefer to do their banking business online in some form – digital banking is the new norm. However, it remains important for financial institutions to offer a variety of different digital options: 59 percent of consumers use bank-owned apps, while 29 percent prefer to make transactions from their desktop web browser. Omnichannel and digital-first offers are therefore the focus of demand. Local banking transactions, e.g. in a branch (8 percent) or at an interactive ATM (3 percent), are becoming increasingly less important. 72 Percent of all respondents said that they would consider a branch-less online banking service for their banking transactions.
  • Lack of security clearly has a detrimental effect on business: 90 percent of consumers stated that they are worried about bank or credit fraud in the course of digitization. Many of the respondents have also already had personal experience with fraud risks: 42 percent said that they had been informed about a personal bank or credit fraud in the last 12 months. These incidents clearly have a detrimental effect on business: 67 percent of those affected have subsequently changed their bank or credit union.
  • Flexible payment options as a competitive advantage: Consumers are most likely to pay attention to low fees, digital solutions and security when choosing their bank. In order to meet the search for high-quality, but at the same time cost-effective digital financial services, neobanks could score points, for example, with offers such as fee-free overdraft protection or unlimited currency trading. In addition, some neobanks also offer new payment options, which is popular with customers: 52 percent of respondents would consider digital currencies for payments.
  • The rise of digital cards and contactless payments: Respondents named credit/debit cards with a chip (50 percent) as their preferred payment method, with contactless credit/debit cards (48 percent) just behind. In addition, 53 percent said that they had received a digitally issued debit or credit card from their financial institution. Digital cards can be an effective selling point – almost two thirds of the respondents prefer to open a bank account digitally. This preference is intergenerational: Generation Z (65 percent), millennials (69 percent) and Generation X (54 percent).

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