Although more consumers are using subscription services for financial management, many feel that banks aren’t keeping pace with demand; with a strong desire for consolidated services.
This is according to Minna Technologies‘ latest report, produced in partnership with FT Strategies and with data and analysis from Savanta.
The report highlights not only the rising popularity of subscription services but also their maintained use and relevancy during times of economic crisis.
Ninety-three per cent of the consumers surveyed by the report feel more aware now of the amount they spend on subscription-based products and services compared to 12 months ago.
Many reported having subscriptions for online streaming services, gaming and gym memberships.
In line with the cost of living crisis, the report also found that 46 per cent are spending more on subscription services than they were a year ago.
While spending rises, the data indicates that only 37 per cent have cancelled a subscription in the last six months, emphasising a sustained dependency on these services.
On average, 77 per cent of UK and US consumers have at least one subscription. But when looking towards Gen Z, this average increases significantly to 88 per cent.
With this, the report questions how the future of subscription services will cater to its growingly youthful audience.
Gen Z and the subscription economy
According to Minna Technologies’ report, 27 per cent of consumers aged between 18 and 34 have six subscriptions or more.
The report describes this demographic as “the most prolific participants in the so-called subscription economy,” citing spending habits as a leading factor.
When looking to the youngest end of the scale, the report finds that 53 per cent of 18 to 24-year-olds are spending more on subscriptions now than a year ago.
And likewise, 48 per cent don’t expect to cancel any subscriptions in the next six months.
As reflected in the meteoric rise of buy now pay later (BNPL) services amount Gen Z, consumers are increasingly adopting alternative payment solutions to access the goods they want.
It is clear from the report that banks must take note of this emerging and sustained trend.
A new outlook for banks
The data from the report links this wide-scale behavioural change from ‘ownership’ to ‘renting’ to the challenges of the current economic environment.
Exactly half of the consumers surveyed say that subscriptions enable them to access products, services and lifestyles that they otherwise would not have.
Equally, subscriptions satisfy the growing preference to not commit to long-term purchases. Sixty-three per cent would rather sign up to pay for a subscription through higher recurring monthly fees, than a lower annual fee.
In light of this desire for greater flexibility, transparency and personalisation, the report voices consumers’ concerns that the banks aren’t keeping up.
Seventy-four per cent of consumers would like to manage all their subscriptions ‘all in one place’, and 34 per cent want to use their banking app to do this.
To resolve the complexity of managing multiple subscriptions, 37 per cent will switch banks to find apps that suit their preferences. Among Gen Z and millennials, this proportion rises to 50 per cent.
The expansion of subscription adoption is indicative of “a huge mental shift in the way they are thinking about what they want and need from their products and services,” says Joakim Sjöblom, co-founder of Minna Technologies.
“It’s not just about what they consume but how easy it is to access it, use only what they need and cancel it on the terms that suit them,” he continues.
Pointing to modern commerce, Sjöblom explains how customer loyalty comes down to flexibility and ease of use.
He says that as times get tougher, “customers’ flight to transparency and flexibility will become more pronounced.”
Sjöbolm confirms that banks supporting subscription services will remain “highly attractive” in this environment.
“The ability for households to manage their spending, their usage and their outgoings in one place empowers them to be financially nimble and more resilient,” he continues.
“When half of adults aged 18 to 44 say they’re prepared to switch to a new bank that can help them better manage the half dozen or more subscriptions they use, banks need to sit up and pay attention.”