Consumers Are Crowdsourcing Their Financial Services, While Banks Risk Losing Primary Status
June 11, 2024
Salt Lake City, June 11, 2024 – 85% of consumers say they have positive experiences with their primary financial institution (FI), yet they’re using as many tools or services with other financial providers as they are with their primary FI, according to a new study released today by Galileo Financial Technologies, a leading financial technology company owned by SoFi Technologies, Inc. (NASDAQ: SOFI), in collaboration with Datos Insights.
The Galileo Consumer Banking Report by Datos Insights reveals that, while traditional banks still claim most of the market, they are at significant risk of losing their role as primary FI, and the customer retention and lifetime value that goes with it.
“To remain competitive, financial institutions can provide services that are digital-first, intelligent and eventually autonomous. Financial institutions that fail to deliver will lose their most valuable customers to their digital competitors,” said Derek White, CEO at Galileo. “Banks and credit unions of all sizes can embrace technology and unlock the data they already have to deliver timely, more relevant financial services at the customer’s point of need.”
Key takeaways from the report include:
The concept of using one provider for all financial needs is eroding. Even among satisfied customers, “primary” status doesn’t mean what it used to. Across all age groups, customers are curating their own suite of financial services through multiple providers. Gen Z and younger millennials are leading this diversified strategy: On average, they use more than six financial tools or services. And they are using more than half of these tools outside of their primary FI.
Personalization is paramount, but many FIs aren’t cutting it. More than a third (37%) of consumers surveyed don’t agree their primary FI makes offers that are tailored to their financial situation, and 32% don’t agree that same provider understands their needs or offers personalized service, underscoring the need for banks and credit unions to unlock and use customer intelligence to personalize offers and experiences.
Customers don’t want to talk to their financial institutions. Instead, they want DIY financial services. 60% of people said they prefer to do everything without human interaction, and 42% of younger millennials have used a virtual assistant to conduct financial activities – more than any other generation.
Retail banks are missing a prime cross sell opportunity with gig workers. On the surface, gig workers may look like an average consumer, but their needs are decidedly different. Not only do gig workers use a wider variety of financial tools or services, they over-index for specific services that their primary FI may not be offering to them today, such as credit building, budgeting and expense tracking tools. These customers want their financial service providers to recognize and respond to their unique needs in real-time.
“Consumers are making more sophisticated, informed financial choices as the youngest digital natives build their own financial habits,” said David Albertazzi, the director of Datos Insights’ retail banking and payments practice. “And there are bigger shifts coming, as baby boomers begin the biggest transfer of wealth ever to younger generations who have significantly different financial preferences and behaviors. Banks and credit unions will serve themselves well by maximizing their own accountholder insights to offer more personalized financial services that push customers deeper into their financial ecosystems.”
For more information on the research data or to get a copy of the research report, visit galileo-ft.com/lp/the-galileo-consumer-banking-report-by-datos-insights.
About the Galileo Consumer Banking Report
This report is based on a study Datos Insights conducted in Q1 2024 of 2,500 consumers in the U.S. Those qualified to participate in the study have a relationship with a financial institution and participate in a research panel. The pool of consumers who answered questions to determine their qualification for the study was in proportion to the population of their country for age, gender, income, geographic region and race.
About the Digital and Core Banking Offerings at Galileo
Through API-centric and microservice-based back-end technology, the Cyberbank Core digital banking backbone enables FIs to augment or replace their old core banking systems and dynamically create and deliver tailored financial products and services based on individual customer needs and behaviors. Through its Cyberbank digital services, Galileo empowers financial institutions to deliver seamless and innovative customer-centric banking experiences.
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About Datos Insights
Datos Insights delivers the most comprehensive and industry-specific data and advice to the companies trusted to protect and grow the world’s assets, and to the technology and service providers who support them. Staffed by experienced industry executives, researchers, and consultants, we support the world’s most progressive banks, insurers, investment firms, and technology companies through a mix of insights and advisory subscriptions, data services, custom projects and consulting, conferences, and executive councils.
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