Challengers and changing expectations: takeaways from the MRS financial conference

Challengers, trust and authority

Challenger or ‘neo’ banks – such as Monzo, Starling Bank and Atom – are creating new competition for the UK’s established banks, but while growing in popularity with some consumer groups, awareness of digital-only players remains low compared with their traditional counterparts.

Sumran Kaul, senior manager of insights at News UK, presented the results of research the publisher conducted to explore how consumers spend, save and manage their money.

“Challenger banks are still relatively unknown compared to traditional banks – it’s important to remember we’re in a bubble here in this room,” said Kaul. “Trust and awareness are linked – obviously if I don’t know you, I’m not going to trust you.”

The research found that while challengers are perceived to show that they’re on the side of consumers and care about their interests – helping them manage their money more easily – consumers’ familiarity with established banking brands still instils more trust and confidence.

This is reflected further in analysis showing the behaviours around challenger banks: for the majority of users, they are secondary accounts used for travelling and managing disposable income, while most people still have a primary current account with a traditional bank for their salary, mortgage or rent and bill payments.

Analysis presented by Justin Bell, head of marketing effectiveness at TSB, showed that of all bank current accounts, the big five banks command 76%, but challengers account for 21%. Bell highlighted that perceptions of trust, control and security were holding consumers back from using Monzo et al as their main account.

However, Iona Bain, author of the Young Money blog, speaking on a panel on fairness in the financial services industry, said trust isn’t as important a factor for younger generations of consumers, who perhaps simply haven't bothered to switched accounts. “Trust is not front of mind for young people. Many young people stay with the same bank they had for their student account. They’re not taking advantage of the new fintech landscape.”

However, Bain added: “Given what happened in 2008, that history wasn’t enough to stop them [traditional banks] going to the brink – so young people are looking towards new players, who don’t have the history attached.”

Mapping future tech adoption

It can be difficult for brands to predict what consumers’ relationship with technology may look like in future – but this is key for financial services companies and banks who want to identify areas to invest in from a customer experience perspective.

As part of research to understand the impact of technologies such as artificial intelligence on people’s financial experiences in future, Lloyds Banking Group conducted primary research in China to explore attitudes and behaviours towards technology there, and identify a path towards a potential future in the UK.

China was selected because of its higher rate of technology adoption. The ethnography explored relationships with, and trust towards, technology, and looked at attitudes to machines having human qualities. It found that anything that automated processes and saved people time was highly valued, but that they still wanted to be in control of the technology. None of the technology used in people’s everyday lives was so advanced that they viewed it as human, but this was seen as a benefit, because they don’t need to worry about a machine’s emotional wellbeing.  

“People were using machines to solve problems like improving their health but the machines weren’t capable of fully solving problems,” said Amy Tatton-Brown, senior design researcher at Lloyds. “There was a craving for tech that could understand people and make recommendations.”

Researchers then applied a cultural lens using the Hofstede model to highlight differences and similarities between China and the UK. Lloyds used the research findings to prototype a model of what life may look like in 2025, creating a short film depicting how technology could be used to assist someone whose marriage has broken down in resolving their financial matters.

Additionally, research from RBS and Illuminas showed that consumer expectations of chatbots are changing as the technology becomes more prolific. There are unique demands on financial services in this space as the chatbots need to deal with a much wider question set than those in other industries, for example, retail, while the expectations are higher.

Customer insight teams should be as involved in the chatbot design process as engineers and product designers, argued Ian Goulding from RBS. The research found that tone and personality are becoming more important, and that conversational banking will become more important in future.

Financial services brands missing a trick with the over-50s

While much of the focus in financial services is on developing products and services for younger consumers, research has highlighted that the over-50s, as in other sectors such as retail and FMCG, are being overlooked by finance brands.

An online survey from Strive Insight found that almost 48% of over-50s feel that financial services providers don’t cater well to people their age, while 56% think financial services do a poor job of depicting people their age in advertising and there was a desire not to be depicted as ‘silver surfers’ or marked out as different.

“We redefine old age as we get older and these consumers are not slowing down. People are having families later and their families are staying with them longer – and having the younger cohort around has an impact on financial services and products selection,” said Mark Yeomans, director at Strive Insight.

Banks should not underestimate the influence of younger people on this generation – either adult children still living at home or colleagues – the qualitative research had examples of people using Monzo because a younger relative had set it up for them – word of mouth is a strong driver for fintechs.

While the research found that technology is viewed positively, there was a concern it makes life less personal. Half ( 51%) think it’s harder to talk to a person within companies today and 55% still go to a branch to manage finances, so financial services brands need to highlight that their products are not completely self-serve, according to Sofia Savage, Strive associate director. This human contact does not necessarily need to be in-branch – people just want to be able to speak to someone if they need to.