Depending on what type of bank a consumer uses – major, regional, mutual or neobank – they have varying levels of trust according to a new report from Deloitte.
The report, Open Banking: Switch or Stick? Insights into customer switching behaviour and trust shows the differences in trust between major bank, regional bank, mutual bank and neobank customers.
During a webinar, The Integration Challenge in Open Banking hosted by Which-50 and Dell Boomi, Jamie Leach the Director Data Modernisation at Deloitte Australia discussed these customers and their attitudes to trust.
She said by way of example, “What does a major banking customer look like? Well, we know that almost 60 per cent are over the age of 45. They generally have an undergraduate degree or a certificate level, they’re generally in full time employment and are professional or have clerical-rolls, their household income is generally $65,000 or below, and the higher mortgage balances or lower savings account balances.”
They believe keeping up with new technology is somewhat important, said Leach. They have higher levels of prudential trust in major banks, but they have lower levels of trust in mutuals, and distrust of almost all the digital banks.
When customers do consider switching banks the driver is typically based around looking for better value. “That is important to them, as is the prudential trust.”
She said regional bank customers look similar to major bank customers. “Over 60 per cent of them tend to be over 45, a higher portion of them have high school education.”
If they are not already retired they tend to be in full time employment in a professional or a managerial role, and household income tends to be at $91,000 or above.
These customers also have higher levels of trust when it comes to sharing data, compared to major bank customers.
Among mutual bank customers, 40 per cent of them are over 55 years of age while keeping up with new technology is somewhat important to them it’s not the majority view.
These customers have high levels of trust and are willing to share with mutual banks. They see changing products as easy, which is an important quality for the mutual bank.
For neobank customers, over half are over 45 with a quarter being millennials. They tend to be university-educated, are likely in full-time employment or professional roles, their household income is higher than the other categories. “They tend to have a simplified banking offering, so higher savings accounts, term deposit, balances, debit cards of that nature,” says Leach
Not surprisingly given their choice of digital banks, they regard keeping up with new technology as very or even extremely important. Leach said they tend to have higher levels of prudential trust, and higher levels of information trust in the digital or neobanks. And they believe switching products is easier.
By analysing this kind of data Leach says it is possible to understand the motivation, ability and confidence of bank customers to switch.
“If you’re a digital or neobank customer, you’re either towards over 45 starting to get into retirement or you are starting out as a millennial, you are looking for better value, that is highly important to you, less important than for other customers with a wide range of other factors.
“It’s quite interesting to see as the demographics change, why people are willing to shift, why people are willing to share, and also their views on trust, really do start to change,” she explained.
Venkata Narra, solutions consultant, APJ at Dell Boomi said open banking is customer-focused and encourages competition. “It levels playing field for banks to try winning customers over other banks.
“But on the other hand, it’s about creating new opportunities for the banks to participate in a totally new sector, the new sector being the data sector.
“We are at a point where through open banking, banks are encouraged to participate and have a footprint in data, by being both the contributor and the beneficiary. So data offers the potential for a completely new opportunity.”
However many institutions will struggle to capture this opportunity as they are hamstrung by their technology debt.
There is a multi-step step approach overcoming this hurdle debts according to Narra.
“It starts with fixing the integration problem to create reliable and accessible master data. Secondly, brands need to make sure they are genuinely moving along that CX transformation and quality data sharing pathway.”
Thirdly brands need to govern the collection of data which is key to their business and then enables data sharing between partners.
“Finally, the last piece of the puzzle is to create workflows to streamline business operations and improve the experience for the customers, if they want to retain existing customers and attract new customers, by going after new services,” Narra adds.