Consumers Want Value for Money
June 23, 2021
By: Kate Drew
Consumers want value for money from their financial institutions. In fact, 37% of consumers surveyed by Accenture in 2020 put value for money in their top three most important factors when dealing with banks and insurers, making it the top category by seven percentage points. Moreover, this factor has increased in importance from the firm’s 2018 study, where it made it into the top three for only 27% of respondents.
The greater importance placed on value for money could be driven by a couple of factors. First, this latest survey was fielded during the Covid-19 pandemic, when many people were experiencing financial stress and looking for ways to stretch their income. Additionally, and perhaps likely to have a more long-lasting effect, is the way fintech competitors have come on the scene with new value propositions at lower cost than many traditional institutions. For example, neobanks like Chime are well-known for their fee-free checking accounts that come with a promise of complete transparency. In fact, most of these players make that value proposition a central part of their marketing materials and pitch to customers. The emergence of these competitors, which are well funded and without the heavy compliance burden of a bank, is putting a lot of pressure on the industry to keep up when it comes to providing attractive propositions. And it seems as though, now, that is translating into heightened customer expectations.
To take it a step further, there are areas where fintechs’ ways of doing business are starting move the industry as a whole. For instance, these upstarts have largely done away with overdraft fees in their models. And, just a few weeks ago, Ally Financial announced that it would follow suit, prompting a ton of discussion around whether this would become the norm. Truthfully, it is highly unlikely that fintech startups are going to unseat the banking industry entirely. What is likely, however, is that by serving customers in new and different ways, they are going to continue to move the needle and influence customer demands and the market’s response. These tech-savvy entrants are excellent at understanding customers and delivering value. For banks, this means trying to figure out where they can unlock more value for clients in their own businesses. That might translate to doing away with overdraft fees today, but it will likely mean many more things down the line. Think about where you can add value without raising prices, get creative, and don’t underestimate the new guys — learn from them.
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