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The new financial tribes that banks need to know
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Fintech

The new financial tribes that banks need to know 

A new survey as part of the Mambu Disruption Diaries series highlights the consumer spending habits which veteran banks can’t ignore

Will spontaneity be the downfall of veteran banks? A new report from Mambu shows that 50 per cent of customers’ spending habits in the UK and Europe are considered ‘spontaneous’ with their values and experiential demands dictating their every move.

In a post-pandemic world, we are seeing the acceleration of adopted digital behaviours. From embedded finance to buy-now-pay-later (BNPL) services, the marketplace is evolving in front of our eyes. The driving force behind this change is consumers. With fast-paced lifestyles slowly resurrecting and consumer confidence being shaken to its core post-Covid, consumers have snapped out of autopilot and realised the power is in their hands.

What does this mean for financial players of today? Figures from Mambu’s new report titled The Financial Tribes You Need to Know show that the legacy-driven industry is on the back foot with consumers in the driving seat.

With 14 per cent of consumers currently switching banks and a further 43 per cent intending to switch soon, these are challenging times for financial service providers. Consumers seem to sense the competition for their attention and are finally using the opportunity to demand better products and services from their bank.

The report – which surveyed 4,517 banking consumers – illustrated that the availability of online and digital banking services is important to an overwhelming majority (86 per cent) of respondents globally.

With Brexit leading to expatriates leaving the country, and with a prediction that 25 per cent of bank branches in Europe will close over the next two years, there is a sense of urgency. We see similar figures in the Middle East with 665 banks closing since 2005 in just the UAE alone. New consumers’ demands for digital are leaving a permanent mark on the financial industry.

So, what do banks need to do to keep up? The latest in Mambu’s Disruption Diaries series, this new report has grouped modern consumers into five different tribes based on their motivations, values and spending behaviours. They include: Techcelarators, Ethical Bankers, Convenience Cravers, Covidpreneurs and Neo Asset Hoarders. Within the European, Middle Eastern and African (EMEA) region we are seeing a dominant sprawl of Ethical Bankers (34 per cent) and Techcelerators (33 per cent).

EMEA banks need to connect with these tribes and discover what keeps them ticking to stop them from switch- ing banks. Let’s take a closer look at these key tribe personas.

Techcelerators: Opening the door to digital

Techcelerators are becoming increasingly tech savvy. Members of this tribe of consumers have learned to manage their money independently, thinking of ATMs and physical bank branches as something nice to have rather than a necessity. Online banking services, however, are of utmost importance to them.

Globally, over half of consumers (57 per cent) surveyed use online banking to manage their finances. These consumers are becoming familiar with contactless payments and online shopping as well and – composed of middle aged and above individuals – blend the old and new way of banking. They value owned assets and long-standing relationships but have become attuned to the flexibility of digital banking. They are, however, still recent converts.

Of these, 53 per cent are aged above 35, and many are still drawn to cash use when shopping in person so banks must endeavour to provide hybrid experiences. The growth of more online services among consumers doesn’t negate in-branch services; it means they want a fusion of the two.

Face-to-face interaction is crucial to this tribe as they predominantly value long-standing relationships (83 per cent). No matter how flexible and fast digital services may be, consumers still long for human connection which is why they see customer service excellence in everyday banking services as a priority.

Despite some banks providing better customer experiences and diverse online banking services, now is not the time to be complacent. Banks must capitalise on the Techcelerators’ growing confidence in the latest technology to provide new services and functionalities to retain customer loyalty. Imagine capturing 90 per cent of consumers’ attention solely because of an online banking presence.

Ethical Bankers: Consumers want to see more purpose

The EMEA region is home to one of the largest tribes that identify as Ethical Bankers (70 per cent). These are purpose-driven savers that want to make a positive impact on society and the environment.

How do they do this? Members of this tribe roar for meaningful social action as they want banks to put purpose over profits.

Don’t assume Ethical Bankers won’t pay extra to make sustainable services viable, because they will. Globally, 68 per cent of this tribe is open to premium options but only if sustainable values are truly embedded across the business. Of the UK respondents surveyed, 69 per cent stated they are more likely to choose a bank that adopts this ethos.

Financial institutions must help them to reduce their carbon footprint and make a positive difference in the world from top to bottom if they are to retain this tribe as customers.

Additionally, their search for climate placidity makes this tribe extremely spontaneous. EMEA consumers ranked among the most impulsive spenders globally with 19 per cent claiming their spending habits are “very spontaneous”. When Ethical Bankers have the intention to switch providers, banks must ensure they’re offering an unrivalled combination of flexibility and tailored, green services to prevent them from jumping ship.

To really tick the box for these consumers, banks must grasp that their foresighted nature goes beyond big altruistic actions. It stretches to their everyday behaviours, from investment strategies to saving methods.

Pre-pandemic, the EMEA region had the highest number of property renters in the world but after facing troublesome times 46 per cent say they are now more likely to purchase their own home than they were 18 months ago.

We see this in the UK as consumers are only purchasing essentials and following a budget. This is what the pandemic really drove home: the need for a nest egg for the future. Some 74 per cent of UK consumers resonate with this logic as their investment strategies are guided by ethical principles.

It doesn’t have to be the end for these players Veteran banking players still have time to keep up with consumers before they hang up their boots. Acknowledging the tribes with which consumers identify will help to strategically deploy new products tailored to their wants and needs.

Across Europe and the UK, it’s recommended that banks’ focuses are two-fold. Firstly, to battle consumers’ spontaneity, banks of today must be flexible in their offerings, delivering products that are highly composable with ease through online best practices. This is not exclusively limited to online platforms – striking an omnichannel balance would be best.

Finally, traditional banks must look to embed sustainability in all aspects of their brand and business. This starts by evolving the monolithic ethos that banks often empower. What we’ve seen with the Ethical Banking tribe is that consumers are soaring ahead of banks but are hunting for that one financial player who is setting the standard and holding others accountable. This is the goal. If traditional players can digitally transform fast enough, they have a chance to be the number one choice for consumers.

To learn more about the priorities and behaviors of the five consumer tribes identified, and how banks should adapt their strategies to fit these evolving demands, read the complete report by Mambu here.

Partner content in association with Mambu.

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