The Future of Finance 2017: Breaking up is hard to do

Welcome to The Future of Finance report for 2017. We interviewed almost 20,000 people in 16 countries across the world about how they see the financial services sector: how they manage their money now and how they’d like to in the future.

The results provide a snapshot of consumer beliefs and perceptions of a finance industry that is being reimagined. It’s an industry at the end of its first wave of disruption. In many countries almost every service offered by a bank is now offered by a fintech company. For the first time ever, consumers have a real choice in how they manage their money. Previously it was either use them or avoid them; now there are alternatives to the banks and the other providers. The shift from bank to non-bank is at different stages in different countries, with various factors at play from how consumers view the existing providers to how encouraging the regulatory landscape is of innovation. But there are clear similarities.

The overall picture is one of disillusionment among consumers. People across the world have come to expect the worst from banks; they believe that the banks’ only motivation is profit with no thought for customers. While people may trust banks with their money, they don’t trust them to do the right thing. The relationship between the customer and their bank seems increasingly paradoxical as each day passes. At the same time, there’s an emerging new normal of how money is managed via smartphones and how secure people perceive online to be. That new normal may be the behavioural nudge needed to make people break away from the banks.

Regulatory changes are making it possible for the next wave of innovation within the very foundations of the sector as Central Banks all around the world upgrade their payment systems. Creating these new foundations means that the old structures will collapse, making a new world of finance possible.

We believe that this is the biggest global survey into consumer attitudes of finance to date. It is by no means exhaustive and we plan to add more questions and more countries in the years to come.
We hope it will act as a barometer of people’s attitudes and perceptions as the revolution in the financial services sector takes hold.

Key findings

The new bank branch is the smartphone

70% of people would prefer to manage most of their finances online. In New Zealand and the Netherlands, this number jumps to 81% and 79% respectively. At the other end of the spectrum is the US with 58% and Japan with 57%.

In some countries (Australia, Brazil, the Netherlands, New Zealand and Singapore), managing finances via smartphones is now the second most preferred way, pushing the in-person bank visits into third place. The country where most people prefer to manage their finances on their mobile is South Korea with 37%.

.. with security to match

This move to online is evident in attitudes towards security too.
Over half (54%) believe online verification is more secure than face to face or paper-based verification. Biometric fingerprint identification (allowing customers to save their fingerprints on their devices and then use them to access their mobile accounts) was only introduced to financial services relatively recently. Not all banks use it yet, but consumers already rate it as just as secure as in person identification.

Banks: focused on profits not customers

Only 15% of people believe that banks offer a great service and a fair deal. Of the countries surveyed, there was one outlier that was distinctly more positive than others: in New Zealand, 28% believe that banks offer a great service and a fair deal. At the other end of the scale only 6% of consumers in Ireland and 5% of consumers in France and Germany agreed.

69% of people believe that most banks offer a poor or average service. Countries as diverse as Ireland (84%), Spain (81%), South Korea (79%) and the UK (77%) were among the most critical.

A fifth of people think that banks don’t care about their customers. The overwhelming majority (87%) believe the banks don’t think about what customers need.

So what are banks focusing on if it’s not their customers? 50% believe that the banks focus mainly on their profits and not on what customers need.

Faithful to one, disillusioned by all

People are in long-term relationships with their banks: 69% have been with their bank for over five years.
The Dutch are the most faithful with 80% having been with their provider for more than five years; in fact, 68% have been with them for over ten years.

For most people, it’s because they don’t believe there is an alternative that will offer a better service. In fact, 63% believe their bank is the best available option, or are simply unaware of alternatives. The hassle involved in finding an alternative is the next most popular reason (24%) for staying with their current provider.

When asked for the main thing they would change about their bank, the most popular answer (43%) was making its fees lower, followed by making its fees clearer (22%). Improved convenience and better customer service were both chosen by 21% of those surveyed.

So why do people stay?

For some services, the one thing that most people would change about their banks is already available from alternative providers. So why do people stay?

The most important factor in choosing a provider was trust in the provider or the security of the service (33%) with cost as a secondary consideration (17%). This was not the case in all countries. In Canada and France, trust / security and cost were considered of equal importance. Security was a higher consideration for people in Brazil, Japan, Hong Kong and South Korea.

So is it that non-banks are perceived as less secure than banks? For some, yes. Around half think that banks are more regulated. Two thirds (65%) would never use a provider that was not regulated.

In almost all of the countries, the two main motivating factors for switching from banks to tech companies are security and cost. In Singapore and South Korea, it’s security and convenience that are the two main reasons.

Time for a change?

Maybe people have had enough. 30% say they would consider using an alternative to banks and the traditional providers. Indeed, 15% say they’d be happy never to use a bank again.

In one year’s time, a third (32%) of people say it’s likely they’ll be using tech companies for 50% or more of their financial needs. That number is significantly higher in some countries like Brazil, Singapore, South Korea, Hong Kong, Spain.

When looking ahead to five years’ time, the percentage of people who say it’s likely they’ll be using tech companies for the majority of their financial needs varies from 14% in Japan and 20% in Germany to 50% in Singapore, 52% in South Korea and 69% in Brazil, with the global average around 36%.

All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 18,821 adults. Fieldwork was undertaken between 22nd November - 15th December 2016. The survey was carried out online. The figures have been given an even weighting for each country to produce an ‘average’ value. The study surveys adults from 16 countries globally with the following sample sizes:
Australia, 1004 adults
Brazil, 1031 adults
Canada, 1043 adults
France, 1070 adults
Germany, 2188 adults
Hong Kong, 1001 adults
Ireland, 1020 adults
Japan, 1004 adults
Netherlands, 1002 adults
New Zealand, 1003 adults
Singapore, 1023 adults
South Korea, 1057 adults
Spain, 1007 adults
Switzerland, 1088 adults
UK, 2149 adults
USA, 1131 adults