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Can banks deliver the value consumers crave?
Banks are under attack from technology companies and other insurgents, some of which have strong offerings and a more appealing experience for customers.
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Bank illustration. (Shutterstock/File)
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anks are under attack from technology companies and other insurgents, some of which have strong offerings and a more appealing experience for customers. In payments, for instance, third-party providers have come to dominate in many countries, including Brazil, Germany and India. In Indonesia, Go-Pay has been adopted by 39 percent of respondents in Bain & Company’s recent consumer survey, ahead of the 31 percent adopting a credit card.
The tech companies obviously have digital expertise, and the big ones have massive customer bases and stores of cash. But they have also developed another weapon: consumer trust. Firms such as PayPal and Amazon garner a level of trust with consumers almost as high as banks in general, according to the survey of nearly 152,000 consumers in 29 countries. In Indonesia, some 65 percent of respondents trust at least one tech company more than banks in general. And trust affects a customer’s willingness to buy banking services. For example, respondents who accord higher trust to Amazon would be more open to trying a free online bank account with the company if it were offered.
Beyond trust, consumers also tell us they perceive tech companies often deliver more value than banks. In banking, of the 30 Elements of Value we have identified, the five elements that have the greatest impact on loyalty are, first, quality, followed by saves time, reduces anxiety, simplifies and heirloom (a good investment for future generations). Survey respondents on average give their primary bank a lower rating on these elements than one or more of the major tech firms: Amazon, Apple, Google and PayPal.
Still, bank can hold their own with competitors from the tech world. For instance, some banks are competing successfully in payments in Sweden, Poland and Singapore. In Sweden, the Swish app now dominates peer-to-peer payment and merchant purchases, after a consortium of seven large banks started it in 2012.
