Consumers Love Their Banks (For the Most Part), But Happiness is Wearing Thin
By Garret Reich, Editorial Operations Manager
The report: Consumer Banking Report 2024
Source: EPAM
Why we picked it: The Financial Brand has covered the EPAM Consumers Banking Report for years, particularly because of the high caliber data and insights that the firm includes in the report. It’s large, and covers a swath of trends within the industry, leaning most heavily into the customer experience and the gaps that still exist. This iteration of the report highlights key areas for investment, such as instant payments and personalized financial education, while also alerting bankers to potential pitfalls, like customer hesitancy around AI.
By leveraging these insights, bankers can make informed decisions about resource allocation, product development and customer engagement strategies, ultimately helping them maintain a competitive edge in an increasingly crowded and complex market. In essence, this report equips bankers with the knowledge they need to build stronger, more resilient relationships with their customers in an era of unprecedented change.
Executive Summary
The narrative in the late 2010s was fintechs and digital banks overpowering the trust established by traditional banks over decades. Turns out, it couldn’t be farther from the truth.
In fact, EPAM’s latest Consumer Banking Report from EPAM reveals a surprising truth: people still love their banks. Despite highly publicized bank failures and global economic challenges in 2023, a whopping 83% of consumers surveyed across nine countries reported being happy with their primary bank.
What’s driving this enduring satisfaction? The answer lies in a delicate balance of trust, technology and the human touch.
The 2024 report, which surveyed 9,000 retail banking consumers, uncovers a paradox at the heart of modern banking. While customers crave cutting-edge digital services like instant payments and AI-powered financial advice, they also value the reliability of physical branches and face-to-face interactions. This tension between digital innovation and traditional banking practices presents both challenges and opportunities for financial institutions as they navigate an increasingly complex landscape. It’s where legacy institutions still have a powerful leg up.
Even so, preserving the sanctity of that love and trust is critical. The rise of fintech companies and the entry of big tech firms into financial services have intensified the pressure on traditional banks to innovate. Yet, as this report shows, established banks still hold a significant advantage in terms of consumer trust and loyalty.
Key Takeaways:
- Customer satisfaction remains high, with 83% of respondents happy with their primary bank.
- Trust is paramount to retaining these satisfaction levels — 79% of consumers trust their banks to manage their finances safely.
- Physical branches still matter – 86% of respondents used a branch in the past year.
- Instant payments top the list of desired digital features, with 78% of consumers rating it as most important.
Why we liked the report:
Why we didn’t:
The Power of Trust in Turbulent Times
Consumer trust in banks remains remarkably resilient, even amidst the rocky economy uncertainty of 2024 and the significant challenges banks faced likewise. EPAM’s report found that 79% of respondents trust their banks to manage their finances safely, with 81% specifically trusting their primary bank to keep their data secure.
This high level of trust appears to be rooted in strong customer service and a solid reputation. Among those happy with their banks, 46% cited great customer service as the primary reason, while 29% pointed to the bank’s good reputation. Even in the face of highly publicized bank failures in 2023, consumers seem to have maintained or even increased their faith in larger, more established financial institutions.
"It’s up to banks to leverage this trust — built on strong human-centered relationships and reinforced by strong regulations — to educate consumers on how this new technology, as well as the data banks collect, creates a better experience for them in the long run," says Dennis Joosten, head of Banking Practice at EPAM.
The resilience of this trust is particularly noteworthy given the broader context of data breaches and cybersecurity concerns across various industries. The report found that 91% of respondents cited trust in the safety of their personal data as the most important ability for banks. This highlights the critical importance of data security and privacy in maintaining customer trust.
Do you want to read the whole report? Inside are charts, additional insights and essential consumer research no banker can miss. Check it out here.
The Digital Dilemma: Balancing Innovation and Tradition
While trust in banks remains high, the report reveals a complex relationship between consumers and banking technology. On one hand, customers are eager for digital innovation. When asked about the most important digital features banks could offer in the next three years, 78% of respondents cited instant payments as their top choice. Other popular digital services included access to a digital banker or concierge (64%) and personalized budgeting support (62%).
However, this enthusiasm for digital services is tempered by caution, particularly when it comes to artificial intelligence. The report found that 57% of respondents would not feel comfortable acting on financial guidance provided by an AI service. This hesitancy was more pronounced among older age groups, with only 25% of those aged 55+ comfortable with AI-driven financial advice compared to 53% of those aged 18 to 34.
Interestingly, the desire for digital innovation hasn’t diminished the importance of physical bank branches. A surprising 86% of respondents reported using a physical branch in the past year, with 45% doing so monthly. Even more unexpected, those aged 18-34 were the most likely to have banked in a branch over the last 12 months (88%).
As Chris Tapley, vice president of financial services consulting at EPAM, explains: "Despite the ubiquity of these service offerings via digital channels, many consumers still believe it’s easier to bank in person. If banks are going to differentiate themselves through their digital services, they need to make them easier to use — or they need to show customers just how easy they are to use."
Bankers also need to frontload their financial education work and personalization of digital products. A significant majority of respondents (68%) expressed a desire for better financial education from their banks, while 66% wanted advice on how to manage their money better.
This hunger for knowledge presents an opportunity for banks to leverage their physical branches and human staff in new ways. Rather than simply processing transactions, bank employees can become educators, helping customers understand and navigate both digital services and broader financial concepts.
The Tech Behind the Scenes: Composable Banking and AI
To deliver the seamless, personalized experiences customers crave, banks need robust technological infrastructure. The report emphasizes the importance of "composable banking" – a modular approach to banking technology that allows for greater flexibility and innovation.
Instant payments, cited as the most desired digital feature by 78% of respondents, serve as both a catalyst for and beneficiary of composable banking. As Brown explains, "When new instant payments infrastructure is adopted — be it by a country or a region — it raises the technological capability of the whole set of banks there, assuming they have composable architectures capable of leveraging those new systems."
Artificial intelligence, despite consumer hesitancy, also plays a crucial role in this technological evolution. While customers may be wary of AI making financial decisions on their behalf, the technology can significantly enhance customer service, fraud detection and personalization behind the scenes.
Interestingly, the report found that 96% of respondents who had knowingly used an AI-enabled tool to manage their finances were satisfied with the results. This suggests that as consumers become more familiar with AI in banking, their comfort levels may increase.
The gap between hesitancy towards AI and satisfaction with its results points to a significant opportunity for banks. By gradually introducing AI-powered features and clearly communicating their benefits, banks can help customers become more comfortable with this technology over time.
Curious to learn more? Check out EPAM’s full report here.