Consumer Attitudes, Sentiments, and Expectations Toward Banking and Financial Services
2022 saw many disruptions across industries, including the financial services landscape. The ongoing tug-of-war between neobanks and traditional incumbents, the dramatic crash in the value of cryptocurrency assets, and the rise in the popularity of embedded finance products were just some of the disruptions seen in the past year.
In this time of rapid transformation in the financial space, we at EPAM Continuum sought to uncover how consumer attitudes, sentiments, and expectations have evolved, presented through our Consumer Banking Report 2022, consisting of responses from 26,000 consumers from eight countries around the world. The key highlights from the Consumer Banking report provide a guide for banks and financial institutions to connect with and leverage consumer insights in 2023.
1. Leveraging Consumer Satisfaction to Gain Deeper Insights
From 2020 to 2022, consumer satisfaction with banks has remained high. In 2022, 82% of consumers reported being satisfied with their banks, and 84% of consumers reported being satisfied with the digital experience provided by their primary banks. That said, the report also uncovered an ongoing trend of consumers opting for an unbundled banking experience, using financial services and products from providers other than their primary banks.
Despite high satisfaction, 77% of respondents could be encouraged to switch banks for favorable interest rates, reduced or no fees for new account features, and inviting welcome offers. Banks must ensure that their products offer a user experience that at least matches the alternatives and preferably exceeds them. This allows banks to get more customer attention, which will drive loyalty.
2. Redefining In-Person Interactions at Branches
85% of consumers reported having used a bank’s physical branch in the last year. The main reasons behind these branch visits:
- Face-to-face interaction (35%)
- Using services that are not available online (32%)
- Ease (26%)
47% of global consumers are willing to pay for personalized in-branch financial guidance, and 38% would turn to their banks for financial advice. Rather than treating the branch as a place for transactional relationships, such as making deposits, banks should rethink their branch strategy as a center for creating meaningful connections with their customers. This is also an opportunity for banks to evolve the role of branches into advisory and educational centers to add more value and meaning to their customer relationships while adding higher-value revenue streams.
Our analysis of qualitative and quantitative data from customers and staff at Manulife, a multinational insurance and financial services provider, led us to the same conclusion.
EPAM Continuum used customer voice and data to inform the design of the new customer service center (CSC) in Hong Kong, a merger of two CSCs to support increased demand and customer flow. The aim was to create an experience that would be less “queue and transact” and more “guide and digitalize."
3. Rapid Growth of Embedded Finance
Embedded finance has become popular in the financial space, where it has reduced the barriers to completing an experience with consumer brands, enhanced customer experiences, prolonged customer interaction with brands, and encouraged loyalty. 51% of survey respondents have used some form of embedded finance, which is predicted to become a $7.2 trillion opportunity by 2030.
The most common example is that of Buy Now, Pay Later (BNPL) services. Nearly 22% of respondents reported using BNPL primarily because of ease of usage and better affordability through installments.
In addition, most fintech companies operating in the embedded finance sphere operate from their own balance sheets. Most do not have a banking license and cannot offer a full suite of services like taking deposits. This helps position retail banks with a competitive advantage, which, given the general consumer appetite toward embedded finance and ongoing trust consumers have voiced for their primary banks, has the potential to lead to widespread adoption.
4. Interest in Cryptocurrencies and Non-Fungible Tokens (NFTs) Has Declined
Due to the volatility of cryptocurrencies and NFTs, only 28% of consumers have purchased either cryptocurrency or a non-fungible token. Only three out of 10 consumers reported they would consider investing in cryptocurrencies or NFTs in the next 12 months. Despite the overall dampening of the general consumer sentiment around cryptocurrency, the higher interest from younger demographics between age 18-44 is worth noting, at above 40%.
However, from a retail banking perspective, regulatory restrictions on providing investment guidance limit how much formal advice any bank is able to offer, even before considering any pending regulatory actions that may be targeted toward protecting consumers.
Interested customers will likely demand additional security and transparency around crypto investments. Larger institutions may have access to the resources and skills to build out their solutions for customers. In contrast, smaller institutions may need to embrace fee-based custody services to meet consumer demand.
5. Mixing Business with Personal Finance
A total of 44% of respondents, who identify as self-employed, freelancers, business owners, or members of the gig economy, use their personal accounts to manage their small businesses. The gig economy is expected to generate roughly $455 billion in 2023, an increase of 53% from just last year.
The main reasons for using their personal accounts:
- Ease (48%)
- Ability to keep money in one place (41%)
- Have not thought about the need for a business account (23%)
These insights reveal retail banks have an attractive opportunity to innovate in the small business banking space. Whether providing insight into cash flows, creating digital divides to compartmentalize funds, or simply providing specialized rates, this is an area ripe for building a competitive advantage.
Use This Wealth of Information to Your Advantage
These five significant trends have revealed a wealth of information about consumer attitudes and needs toward retail banking products and services. Banks will need an agile approach to assessing a rapidly changing market. From leveraging trust to bundling disparate services into one holistic view, evolving the customer-branch relationship, taking a cautious approach toward cryptocurrency, embracing embedded finance and tapping into the gig economy, this can pave the way for a deeper engagement with consumers and the services they are demanding – while learning more about their needs.
Download the full 2022 Consumer Banking Report here.