U.S. Banking and Finance Preferences

Goals

To determine the banking and finance preferences of U.S. consumers that include the following:
  • Consumer preferences
  • Changes to the market since COVID-19
  • Loyalty and switching drivers
IF data is limited, provide the following:
  • Best in class marketing examples
  • Financial industry trends

Early Findings

Data Availability

The initial round of research indicates that data availability is adequate on this topic.

U.S. Consumer Preferences in Banking and Finance

  • U.S. consumers feel the most important features needed from a bank are high-quality customer service, low fees, security and fraud protection, mobile and online access, and competitive interest rates (90% of consumers want competitive interest rates).
  • Due to higher digital adoption and evolving customer preferences for different channels, 76% of U.S. consumers have switched to internet and mobile banking.
  • Customers view banks as equal and do not know how to distinguish between brands. Because of this problem, simplicity (36%), a variety of products and services (17%), and personal relationships (10%) are important differentiators.
  • American small and medium enterprises prefer convenience and availability when choosing a bank. SME customers are turning to open banking providers to address their needs because their FinTech adoption allows for 24/7 availability.
  • Financial education is one powerful way for banks to improve customer loyalty. 82% of retail clients say they place more trust in a financial institution when provided annual continuing education to better understand financial products.

Changes to the Market since COVID-19

  • An Accenture study indicates the push for digital financial and banking methods poses the risk of becoming commoditized, price-driven, and incapable of building customer trust. Yet, 50% of U.S. consumers currently interact with their bank through mobile apps or websites.
  • The pandemic has accelerated the move to digital banking and made credit within reach for more customers. In the U.S., FIS estimates credit cards will account for 5% of transactions by 2024, up from a current 2% market share.
  • 14% of U.S. consumers are likely to switch their primary bank in the next six months, while one-third say that, before COVID-19, they were not considering changing their financial institutions.
  • FICO released a banking study that found U.S. and Canadian consumers have embraced digital account opening and biometric security in the wake of the pandemic- three-quarters of consumers will provide banks with their biometrics to secure their accounts including facial scan, fingerprint, and/or voice print.
  • A recent Visa survey (Plaid) suggests 59% of Americans use more apps now to manage money than pre-COVID-19.

Loyalty and Switching Drivers

  • According to PwC, U.S. customers will pay up to 16% more for similar products or services if they have received excellent service, while 32% of customers will seek alternatives after a single bad experience and 60% will leave after multiple negative encounters.
  • Customers view banks as equal and do not know how to distinguish between brands. Because of this dilemma, simplicity (36%), a variety of products and services (17%), and personal relationships (10%) are highly important differentiators.
  • 25% of Americans will switch to a competitor, or abandon the application process if asked to go outside of their chosen channels to complete an application.
  • A recent survey shows that financial institutions have room for improvement in managing the customer experience, as 36% of consumers believe their institution exceeds customer expectation, while only 33% to 36% can convince consumers that they care about their complaints.

Summary

  • In our initial hour of research, we were able to provide data about U.S. consumer banking and finance preferences. These preferences show that most customers chose an online or mobile baking experience.
  • Covid-19 has increased the need for banks and financial institutions to move towards FinTech to increase customer retention rates.
  • While we were able to provide multiple data for consumer preferences, changes to the market since COVID-19, and loyalty and switching drivers, we were not able to provide the information for best in class marketing examples and financial industry trends. We can provide this information in additional hours of research.
  • Please select one or more of the options provided in the proposed scoping section below.

Research proposal:

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