LONDON–New research has confirmed what many credit union leaders are already experiencing: COVID-19 is affecting financial services and payments.
Trustpilot, an online provider through which people share more than two-million reviews each month, polled consumers across six countries and conducted interviews with relevant brands to explore evolving consumer attitudes to debit- and credit-related products and services offered by financial institutions.
According to Trustpilot, the five key takeaways of the research include:
Contactless on the Rise
One of the biggest changes in consumer spending behavior in the last year has been the increased use of contactless and demise of cash, noted Trustpilot.
“Across the six markets covered by this research six in ten (61%) consumers say they are more likely to use contactless for payments since the start of the Covid-19 pandemic,” Trustpilot stated. “Furthermore, more than half (54%) of respondents say they are less likely to use cash.”
Rise of the Challenger Bank
While just under three-quarters (72%) of consumers still rely exclusively on their established or traditional bank, nearly a quarter (24%) of those surveyed say they are now using a more digitally-focused challenger bank, either on its own (6%) or as a supplementary bank (18%), Trustpilot said.
In the U.S. specifically, nearly two-thirds (63%) rely on their traditional bank, while just 7% use a challenger bank on its own. However, there are now 17% who use both a traditional and challenger bank, Trustpilot reported.
“An interesting aspect to this rise of digital banking and payment services is that it is no longer the preserve of millennials. According to payment spreading service Klarna, it has seen significant uptake in older users during 2020.”
The Appeal of Challenger Brands
According to Trustpilot, the most significant driver of business for challenger banks is their low-fee or no-fee service, cited as a major attraction by two-thirds (66%) of consumers. The next most popular selling points are their reputation for customer service (59%), better digital experience (50%) and speed of account set-up (49%), the research found.
Shifting Consumer Concerns
The pandemic and accompanying recession have made consumers more concerned about the cost of their bank accounts and debit or credit card services.
“This was true for 38% of consumers overall, rising to 56% of respondents in the U.S.,” Trustpilot stated. “Across all the markets surveyed, 34% of consumers reported they are now more conscious of security.”
Trust Comes Primarily from Ratings and Word of Mouth
“Consumers are selecting banks and card service providers based on their needs relating to cost, customer service and improved digital experience. Decisions are being made at a time of heightened concerns around cost and security in particular,” Trustpilot stated. “The research findings are very clear on how consumers are making important financial services decisions. They trust one another far more than they do advertising campaigns and social media. In fact, 86% of consumers report high or medium trust levels for word of mouth and reviews whereas social media and advertising score relatively poorly for trust.”
One important takeaway, stressed Trustpilot: “Now is the time for banks to focus on building trust with consumers.”
One bank exec interviewed in the research explained the bank realized it would need to change course quickly to focus on customer needs and, in particular, to stress to vulnerable clients that they were being fully supported.
“We established a dedicated support line for customers over 70 or in isolation. This line was set up to help those most in need and is open 8am-8pm, 7 days a week,” the executive added.