Leading applied analytics company FICO has released a new report examining consumers’ shifting financial behaviour and priorities.
The report states that 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.
Consumers today expect financial providers to deliver a personalized experience with offers and solutions that help them secure their financial future. The report examines how traditional banks need to adapt to deliver better value to today’s digital savvy customer while highlighting specific fintech examples of tailored services to niche customers, such as helping them blend savings and investing together. While the report 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,” said Nikhil Behl, chief marketing officer at 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.”
The report, Counterattack: Banks Field Guide to Fintech Disruption, looks at why US consumers are increasingly moving to fintechs, including specific financial products and services that are driving the adoption. It highlights that banks must continue to evolve to match five specific areas to meet customers’ new expectations: overdraft, saving and investing, buy now, pay later (BNPL), niche neobanks and open banking.