Two-thirds of UK consumers seek financial advice from trusted relationships, influencers, and technology over high street banks
Press Release | 19 Aug 2021
Britons are choosing friends and family and financial personalities as their go-to resources for financial advice.
Mobile banking apps are making four out of five UK consumers smarter with day-to-day finances.
London, UK, August 19, 2021: New research released by Foolproof, a Zensar company, a global engineering and technology solutions company, has identified that the long-term financial health of UK consumers is looking unstable, with nearly two thirds (62%) rejecting high street banks for financial guidance, and instead turning closer to home. This worrying trend potentially puts Britons at risk of future personal finance chaos. It signals an urgent call for banks to become credible knowledge-sharing sources regardless of the platform.
It's not all downhill, as the research indicates mobile banking is benefiting over four-fifths of consumers (84%) by helping them manage their day-to-day finances. Consumers' relationship with money at present is on the up, thanks to improved mobile banking experiences. Those who use mobile banking are:
checking balances more frequently (56%),
saving more money (27%) and
being in overdrafts less often (13%).
While mobile banking is solving day-to-day transactional banking needs, it's not living up to more complex financial tasks. Despite 44 million UK consumers using mobile banking to manage their finances, the research identified that 62% prefer not to turn to high street banks via a store, telephone, or mobile banking apps, as an educational resource for their finances. Instead, UK consumers are turning elsewhere, including friends and family (20%) and financial experts turned personalities (19%).
Chaitanya (Chai) Rajebahadur, Executive Vice President and Head of Europe, Zensar, comments: "Digitalization in banking is a positive attribute for consumers and offers so much potential for banks to enhance their service. Yet, what we see traditional banks typically do when creating complex services digitally, is lose the personal connection — something we as humans all desire — as well as failing to position themselves as authoritative educators."
Like most industries, the pandemic has accelerated digital alternatives to in-person services within the financial space. And banks, pushed by challenger banks and other adjacent digital experiences, have excelled in their mobile and digital solutions that offer immediate functionalities from moving money to keeping an eye on day-to-day transactions. Sources indicate more of the UK population is using mobile banking daily. Moreover, it's also believed UK banking apps are now more popular than social media apps.
The shift to online banking has left hundreds of high street branches in the UK closing their doors. In February, the Financial Conduct Authority urged banks to rethink plans to shut more branches during lockdown over fears more closures will have significant consequences for customers.
George Ioannou, Managing Partner at Foolproof, adds: "In a world where there is a tremendous amount of consumer choice, banks have to start seeing digital as more than simply offering transactional services like checking balances, moving money, and paying bills. The business model must be rewired — at scale — to become an educational, trusted resource for those all-important milestone financial achievements such as saving for a new home. If banks fail to do this, they could lose out on huge revenue opportunities. Taking an approach that harnesses both speed to market and a customer-centered direction of change is how financial institutions of the future will create the best digital experience for their customers."
Chai concludes: "With consumers needing human interaction for important financial decisions, traditional banks could have the upper hand if they play it right. Physical or digital, a service should be more than just transactional: education needs to be accessible, wherever the customer chooses to research. Those who do not appropriately respond risk losing out and are encouraging their customers to receive education from unknown, sometimes unqualified resources which could lead to implications further down the line, both for the bank and for the customer."