Digital Transformation In Financial Services: What Brands Need To Know
Consumer behaviours have continued to evolve as the COVID-19 pandemic lingers on, and finances are one of the areas that have been the most heavily impacted. In fact, one in five people report their finances, and planning financially for the future, as the area of life that has changed most dramatically.
Michael Worledge, Head of Financial Services Research at Harris Interactive explains what brands should know about digital transformation in financial services.
Faced with layoffs, job uncertainty, and an economy in flux, consumers worldwide have become far more conscious. They report thinking more about saving and budgeting than they have in the past, and many have prioritized sound investments with well-known providers. At the same time, their once-low confidence around spending is seeing a slow and steady increase.
Recent data shows that consumers are at a point where they’re ready to spend—and save—more. But what about how they’re doing it, and the role that digital financial management plays?
Let’s look at where consumers are with this digital transformation right now, according to real-time data from our UK Financial Services Sentiment Indicator tracker and our wider Global Barometer. This is especially important for brands because the more understanding and data you can put behind the answer, the better informed your decisions become—and the lower the risk attached to it.
Financial management is forever changed with a rise in “digital first.”
The financial landscape is changing in terms of consumer engagement with internet banking, online payments, digital wallets, and other elements surrounding the transition from traditional to digital financial management.
Digital options play a much more prominent role in normal life than they ever have before. Between the pandemic limiting the ability to visit branches in-person and the resulting pressure on call centres, many have decided that the most remote option is safest.
As a result:
- Two in five people worldwide say they manage their finances online more than they did 12 months ago.
- A growing number of consumers say they’ll never revert back to how they previously managed finances, ranging from 61% in China to 26% in Japan.
- The UK Financial Services Sentiment Indicator shows that 60% of consumers are comfortable with managing finances exclusively online.
Nearly half of consumers have been influenced by the digital transformation so much in the past year that their behaviour has changed significantly—and, most likely, permanently.
Different age groups show different comfort levels with managing finances digitally
The pandemic forced the adoption of digital alternatives to in-person banking across the board. But just because digital financial management has become far more common doesn’t mean that it has been as easily adopted for every demographic.
While more than half of consumers ages 55+ say they’re comfortable using self-serve, online-only channels to manage their finances, they show more hesitation over other aspects of online money management, including:
- Frequently using their mobile devices to make payments, at 19%, compared to 48% of consumers ages 35-54 and 56% ages 18-34.
- Twenty-eight percent claim a comfort level using social media and apps to communicate with financial providers, which is well below average compared to consumers 35-54 (44%) and ages 18-34 (54%).
Still, 40% of respondents from each of the three age groups studied here all agree on the importance of having physical bank branches—an area where the 55+ demographic is right on par with those ages 18-54.
Digital wallets are becoming more popular
It’s important to remember that consumers can use digital in their daily lives without having to log into providers’ apps and websites. This is evident at checkout, where more consumers are reaching to pay with their phones instead of their wallets. That’s because digital brands are connecting with customers through the digital wallet, as with Google Pay, Apple Pay, and more.
In fact, the data shows that digital wallets are becoming a way of life:
- In November 2020, 31% of consumers reported having no need for physical credit or debit cards because they can just use their phone — up from 20% just ten months earlier.
- In November 2020, 37% reported that they’d find it difficult to pay for anything without their phone.
- Today, nearly 50% of consumers report using their phone as a payment tool.
The digital wallet has become a key part of life as smart technology becomes the new normal in activities, financial management, and even in communication via apps like WhatsApp.
Regardless of digital options, consumers support brands that align with their values
Values are of core importance to today’s buyers; they want to know what the companies they’re supporting stand for. This is so crucial, in fact, that:
- 38% of consumers report that they’ve stopped supporting brands that don’t align with their values.
- 57% of consumers report being more likely to support brands that reflect their own values.
Regardless of providing digital options that offer convenience, security, and peace of mind, it’s more important than ever for brands to stand for something and to clearly and continually communicate this to customers. Only a quarter of consumers say they’ll keep supporting brands whose priorities don’t align with their own.
As the data shows, digital is here to stay—and its importance continues to gather momentum across countries and profiles. Brands must stay on top of these ever-evolving trends to make lasting, meaningful connections with their target audience.
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