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Consumers want personalized FSI

Consumers now expect more personalized service from their financial services providers according to the latest survey from FICO (www.fico.com).

Results of the survey show a dramatic shift in financial behaviours of primary bank and credit union customers since 2020.

While most consumers are happy with traditional banks and credit unions, the percentage of Gen Z, Millennial, and Gen X consumers in the United States that consider a digital bank to be their primary checking account provider has more than doubled, at 12% of customers since 2020.  In fact, only 25% of Gen Z consumers use a megabank as the source for their primary checking account.

Today, consumers now expect financial providers to deliver a personalized experience with offers and solutions that help them secure their financial future.   While the FICO report, Counterattack: Banks Field Guide to Fintech Disruption (www.fico.com/en/latest-thinking/analyst-report/counterattack-banks-field-guide-fintech-disruption), does not suggest that banks and financial institutions mimic the approach fintechs are taking, it urges them to change the way they think and alter their approach to be more customer centric.

“U.S. consumers are increasingly exploring new services from fintech’s to meet their ever-evolving financial needs,” says Nikhil Behl, chief marketing officer, FICO.  “The research shows that in order to keep up, there is an immediate opportunity for traditional banks to develop personalized digital offerings that create better, more engaging experiences for customers which translates into long-term loyalty.”

Compiled by Cornerstone Advisors and Nonfiction Research, the FICO report looked at why US consumers are increasingly moving to fintechs, including specific financial products and services that were driving the adoption.  The research noted that 56% of U.S. banks and 69% of credit unions claimed that they had launched a digital transformation strategy, and 55% of those institutions claimed they were at least 50% of the way through their implementation of that strategy.  However, seven in ten banks and approximately three quarters (76%) of credit unions said they don’t plan to replace their core systems as part of their digital transformation.

“While banks are responding to fintechs, too much of the focus has been on making incremental improvements to existing products and service,” adds Ron Shevlin, managing director of Fintech Research at Cornerstone Advisors.  “Banks need to build capabilities and competencies around analytics and personalization to counter the threats from new product and service offerings.”

“The good news is that our research revealed that banks don’t need a wholesale digital transformation; they can pick their battles when it comes to answering threats,” comments  Behl