Consumers in the UK have a wide range of banking options available. In a competitive and now highly uncertain marketplace, how can traditional and challenger banks thrive?
In this report, we’re going to look at the UK banking landscape through the eyes of consumers across different generations.
- First we’ll set the scene, exploring how the UK compares to other countries in terms of their preferences about online / mobile banking and the concept of ‘going cashless’.
- Then we’ll outline challenges, from the different services people want from a bank to what encourages them to switch or remain loyal.
- Finally, we’ll look at the opportunities both for traditional and challenger banks in light of the data we’ve shared, and how that looks in relation to Covid-19 and the restrictions placed on consumers.
We’ll be using data from a Qriously survey we conducted across seven countries around the world, as well as zooming in specifically on responses from the UK. Note: You can access the Qriously data for the UK here.
Setting the scene
Compared to our survey respondents across Australia, Singapore, France, Spain, US, and Germany, those in the UK are pretty active on mobile/online banking. More than 50% of UK respondents say they use this service at least once a week.
The above graph is testament to how ‘sticky’ online/mobile services can be. For every country we studied, either ‘At least once per week’ and ‘Never’ were the top options. Once you’re set up online and find it useful, you’re unlikely to go back.
When we asked people in the UK what they thought of the concept of going totally cashless as a society, they were, compared to the other countries we studied, pretty open to the idea. Participants in the UK were second-most likely to call the idea ‘very appealing’, just behind participants in Singapore.
These two questions paint a similar picture: The UK is (comparatively) open to moving towards digital and cashless means of managing and spending their money. That’s not to say that these will take over from traditional means of banking in the future, but that the UK is a ripe market for financial services brands looking to expand their digital programs. And, as we’ll discuss later, going digital is going to be increasingly important as movement restrictions continue.
Challenges
Differing expectations and preferences
We’ve said already that those in the UK are particularly well adapted to online or mobile banking, and looking at uptake of these services across age ranges shows a promising picture for their continued success.
That said, there are still a significant number of people who haven’t made the jump to online banking, and they can’t be ignored. This is especially true for challenger banks who operate pretty much exclusively via apps and online, but also for traditional banks who are looking to expand their online programs further.
We asked those who said they rarely or never use online banking why they weren’t so keen. Preferring to visit a bank in person and concerns about information sharing came out on top (although, as the ‘None of the above’ bar suggests, there are other reasons out there to be explored).
In order to bridge the gap between those that are online and those that aren’t, the above concerns must be addressed. There is plenty that banks can do to help educate customers wary of moving online.
Getting non-online or mobile users up and running, and making sure they’re comfortable with that process, means that they can stay engaged with their finances in periods of isolation when visiting banks and cash points isn’t possible.
What do consumers really want? Unpacking “None of the above”
Moving away from online and mobile banking specifically, we asked UK consumers what services they want from a bank. In the answer options, we included a range of services that traditional and challenger banks can/do engage in.
As you can see below, options like spend tracking and budgeting advice are pretty popular with the younger respondents. But you’ll also notice the black ‘None of the above’ line that’s particularly prominent for those over 45.
The numbers suggest that these extras are just not appealing to more mature customers. So, if not by introducing extra services, how can banks keep their customers (especially those over 45) happy?
Should I stay or should I go?
We asked our survey respondents whether they’d recently considered switching bank. Those that said ‘no’ were asked what they loved most about their bank, and those that said ‘yes’ were asked why they had considered switching.
Reasons people love their bank are topped by great experiences, across all kinds of customer service and touch points (whether online or in person).
And, predictably, bad customer service was a popular reason for those who had considered switching. That said, there’s plenty of nuance when you dive deeper.
Breaking the data down by age group, we can see the different priorities – 45-54-year-olds are particularly concerned with fees, for example.
From reasons to switch to reasons to stay, there is plenty to learn about what different groups of consumers want from a bank. The insights gathered from this kind of consumer research present new opportunities to improve and shift.
Opportunities and forward thinking
Addressing needs
The most obvious way to make for happier banking customers is to give them what they want. By studying consumer behavior and preferences, banks can easily work out what works for different groups of consumers and present their offerings accordingly.
That said, what people want and what people need are potentially two different things. While many aren’t particularly interested in online / mobile banking, the Covid-19 pandemic means that going online is the best way to easily interact with our finances. Face-to-face interactions with banking staff, popping to the cash point, and even handling cash are either no longer an option or are at the very least discouraged. By addressing the concerns of particular groups, some of which are laid out above, the more widespread adoption of online services can be made smoother.
Once you’re hooked
Once you’re online, as long as the experience is good, you’re unlikely to go back to what you were doing before. In this way, the Covid-19 pandemic is going to change how people interact with all sorts of brands forever. Banking, particularly through online/mobile services, is no exception.
If banks are able to draw in those who are skeptical now, and give them smooth (or even exciting) customer experiences, they could see long term uptake of digital services and all the good things that come with them.