The number and types of products and services that consumers want from financial institutions may be expanding faster than traditional banks can handle.
A survey from Fair Isaac Corp. — known for FICO Scores — found that even though 86% of respondents were satisfied with their banks, a large majority (70%) said they’d be likely or very likely to use a competitor that had more appropriate products and services.
While banks continue to be go-to providers of traditional products like checking and savings accounts, customers appear willing to use non-bank providers for other financial needs, ranging from career advice to bill negotiation services.
Changes among banking customers — and what’s driving it
More than a third (34%) of respondents said they’re already using a non-bank financial services provider, such as a fintech (like Chime or Ally) merchant or technology company. Going further, that figure jumps to 47% among millennials.
One problem could be that banks aren’t addressing consumers’ emotions connected to finance. The FICO survey found high levels of stress about money affected more than two-thirds (68%) of customers, and suggested this uncertainty may be driving customers to non-bank providers.
Among specific desires that consumers said they’d pay for include assistance with:
- Negotiating money situations (29%)
- Self-driving budgeting and investing (27%)
- Advice on big-spending decisions (27%)
- Tips on getting a raise at work (25%)
- Weekly emails on dealing with status anxiety, social media and the urge to compare themselves with others (21%)
In fact, 45% would pay a monthly fee to have unlimited access to these new products and services. And while 50% would rather get them from their current bank, 70% would be willing to go elsewhere.
A DepositAccounts survey from August 2020 found that 91% of Americans had banked virtually over the prior 30-day period, so how traditional banks meet these desires will have a big role in where customers go from here.
High-stakes tussle to provide financial services
The tussle to be the main provider of financial services to consumers is a high-stakes one. Close to 95% (about 124 million) of households have bank or credit union accounts, according to a 2019 survey from the Federal Deposit Insurance Corp. (FDIC). Relatedly, just over 5%, or 7.1 million households, don’t have bank accounts, the survey found.
The dollars involved are of similar magnitude. According to FICO, $252 billion in payments are already going through non-bank payment systems.
Methodology: Cornerstone Advisors and Nonfiction Research surveyed 1,002 consumers over a one-week period.