Gone are the days when consumers have to accept whatever their provider offers. With consumer choice more prevalent than ever, companies must tailor themselves to their customer base to drive future growth.
The 2022 edition of the Fintech State of the Union, an annual research study from 451 Research (part of S&P Global Market Intelligence) and global payments brand Discover® Global Network shows that companies with the best interactions with their customers are those that are not afraid to partner with others to deliver a ‘perfectly’ personalised product.
How consumer choice has evolved
The recent digital wave has seen a huge increase in new alternative payment methods as consumers demand better, more instantaneous access to their finances.
More than three in four (78 per cent) consumers have used a digital payment service (such as digital wallets, P2P payment apps, buy now pay later (BNPL), or QR/barcode payment apps) in the past 90 days, according to the study.
Additionally, 87 per cent of consumers have at least one fintech-provided financial service app on their smartphone, with 28 per cent having three or more.
The widespread consumer adoption of financial service apps is driven by a variety of factors that consumers identified. Among those cited as critical were security (54 per cent), convenience (34 per cent), and transaction speed (31 per cent).
Consumers are also keen to receive payouts from businesses in real time (86 per cent), paying bills that post to an account instantly (85 per cent), transferring funds to/from accounts instantly (82 per cent), and having wages instantly deposited after a shift/workday (78 per cent).
Serving up new solutions
Implementing solutions that address these needs are key to increasing customer satisfaction and customer retention. Yet while fintechs and innovative startups bring fresh perspectives on solutions to address these consumer desires and concerns, gaining consumer trust is not as easy.
Consumers are naturally cautious about sharing information with outside financial technology companies for more personalised experiences. For example, 45 per cent admit being very or somewhat uncomfortable with directing their bank to securely share their account and personal information with third parties. It tends to be older generations that are more uncomfortable sharing their data with third parties than younger generations.
This is where traditional players are able to capitalise on the reputation and the trust they’ve built with their customers over many years. Banks rank as the most preferred provider and the most trusted provider by 10 or more percentage points above tech companies, fintech companies, merchants and telecom providers for all types of digital payments services, with the exception of BNPL.
The study also shows banks also rank as the most trusted provider of emerging finance experiences, including open banking, biometric payments, connected commerce, instant payments and cryptocurrency, with fintechs as a distant second. For example, 51 per cent trust banks to provide open banking services compared to just 12 per cent for fintechs.
Yet while consumers show high confidence in their banks, the majority identified areas in which their financial institution could improve, with faster funds and better fraud controls rising to the top of the list. Thirty-two per cent of consumers identified better fraud controls as a primary opportunity for improvement from their financial provider, while 31 per cent seek faster payments.
Making that connection
One of the best ways fintechs can help build trust and drive adoption with consumers is through partnerships with established banks and payments networks. Companies with deep roots and history of what’s come before are uniquely situated to help fintechs by leveraging lessons learned and to incrementally improve the customer experience.
While for banks, establishing partnerships with fintech providers is crucial for innovation and better meeting emerging customer needs. Fintechs place strong emphasis on customers and technology to bring both innovation and flexibility to a wide spectrum of financial use cases helping banks deliver a better customer experience, while bringing their products and services to the next level.
It’s a win-win-win for all parties. Consumers benefit from the latest technology, financial institutions can expand their offering and fintechs are able to gain scale.
Learn more about how Discover Global Network partners with
fintechs to bring innovative payments technology to consumers.
Source: 451 Research, part of S&P Global Market Intelligence Global Fintech Vendor* Surveys commissioned by Discover Global Network, Q2-Q3 2022
*n=852 Fintech vendor respondents in VP, C-suite and founder roles, headquartered in Canada, China/Hong Kong, Germany, India, Singapore, the UK and the US.