Consumers Are Crowdsourcing Their Financial Services, While Banks Risk Losing Primary Status
June 11 2024 - 7:20AM
Business Wire
Galileo Consumer Banking Report by Datos
Insights uncovers the latest consumer banking behaviors and
preferences
85% of consumers say they have positive experiences with their
primary financial institution (FI), yet they’re using as many tools
or services with other financial providers as they are with their
primary FI, according to a new study released today by Galileo
Financial Technologies, a leading financial technology company
owned by SoFi Technologies, Inc. (NASDAQ: SOFI), in collaboration
with Datos Insights.
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New Consumer Banking Research: People
Like Big Banks, But Gaps Exist - The Galileo Consumer Banking
Report from Datos Insights reveals people generally like their
primary financial institution, but digital innovation gaps exist.
And it’s causing people to “bank” elsewhere. The research
highlights why people are looking outside their primary provider to
meet their digital banking needs. This research also breaks down
what motivates each generation. (Graphic: Business Wire)
The Galileo Consumer Banking Report by Datos Insights reveals
that, while traditional banks still claim most of the market, they
are at significant risk of losing their role as primary FI, and the
customer retention and lifetime value that goes with it.
“To remain competitive, financial institutions can provide
services that are digital-first, intelligent and eventually
autonomous. Financial institutions that fail to deliver will lose
their most valuable customers to their digital competitors,” said
Derek White, CEO at Galileo. “Banks and credit unions of all sizes
can embrace technology and unlock the data they already have to
deliver timely, more relevant financial services at the customer’s
point of need.”
Key takeaways from the report include:
- The concept of using one provider for all financial needs is
eroding. Even among satisfied customers, “primary” status
doesn’t mean what it used to. Across all age groups, customers are
curating their own suite of financial services through multiple
providers. Gen Z and younger millennials are leading this
diversified strategy: On average, they use more than six financial
tools or services. And they are using more than half of these tools
outside of their primary FI.
- Personalization is paramount, but many FIs aren’t cutting
it. More than a third (37%) of consumers surveyed don’t agree
their primary FI makes offers that are tailored to their financial
situation, and 32% don’t agree that same provider understands their
needs or offers personalized service, underscoring the need for
banks and credit unions to unlock and use customer intelligence to
personalize offers and experiences.
- Customers don’t want to talk to their financial
institutions. Instead, they want DIY financial services. 60% of
people said they prefer to do everything without human interaction,
and 42% of younger millennials have used a virtual assistant to
conduct financial activities – more than any other generation.
- Retail banks are missing a prime cross sell opportunity with
gig workers. On the surface, gig workers may look like an
average consumer, but their needs are decidedly different. Not only
do gig workers use a wider variety of financial tools or services,
they over-index for specific services that their primary FI may not
be offering to them today, such as credit building, budgeting and
expense tracking tools. These customers want their financial
service providers to recognize and respond to their unique needs in
real-time.
“Consumers are making more sophisticated, informed financial
choices as the youngest digital natives build their own financial
habits,” said David Albertazzi, the director of Datos Insights’
retail banking and payments practice. “And there are bigger shifts
coming, as baby boomers begin the biggest transfer of wealth ever
to younger generations who have significantly different financial
preferences and behaviors. Banks and credit unions will serve
themselves well by maximizing their own accountholder insights to
offer more personalized financial services that push customers
deeper into their financial ecosystems.”
For more information on the research data or to get a copy of
the research report, visit
galileo-ft.com/lp/the-galileo-consumer-banking-report-by-datos-insights.
About the Galileo Consumer Banking Report
This report is based on a study Datos Insights conducted in Q1
2024 of 2,500 consumers in the U.S. Those qualified to participate
in the study have a relationship with a financial institution and
participate in a research panel. The pool of consumers who answered
questions to determine their qualification for the study was in
proportion to the population of their country for age, gender,
income, geographic region and race.
About the Digital and Core Banking Offerings at
Galileo
Through API-centric and microservice-based back-end technology,
the Cyberbank Core digital banking backbone enables FIs to augment
or replace their old core banking systems and dynamically create
and deliver tailored financial products and services based on
individual customer needs and behaviors. Through its Cyberbank
digital services, Galileo empowers financial institutions to
deliver seamless and innovative customer-centric banking
experiences.
About Datos Insights
Datos Insights delivers the most comprehensive and
industry-specific data and advice to the companies trusted to
protect and grow the world’s assets, and to the technology and
service providers who support them. Staffed by experienced industry
executives, researchers, and consultants, we support the world’s
most progressive banks, insurers, investment firms, and technology
companies through a mix of insights and advisory subscriptions,
data services, custom projects and consulting, conferences, and
executive councils.
About Galileo Financial Technologies
Galileo Financial Technologies, LLC and certain of its
affiliates collectively comprise a financial technology company
owned and operated independently by SoFi Technologies, Inc.
(NASDAQ: SOFI) that enables fintechs, financial institutions, and
emerging and established brands to build differentiated financial
solutions that deliver exceptional, customer-centric experiences.
Through modern, open APIs, Galileo’s flexible, secure, scalable and
fully integrated platform drives innovation across payments and
financial services. Trusted by digital banking heavyweights,
early-stage innovators and enterprise clients alike, Galileo
supports issuing physical and virtual payment cards, mobile push
provisioning, tailored and differentiated financial products and
more, across industries and geographies.
©2024 Galileo Financial Technologies, LLC. All rights
reserved.
Galileo Financial Technologies, LLC is a technology company, not
a bank. Galileo partners with many issuing banks to provide banking
services in North and South America.
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Katie Boyless The Fletcher Group 404.791.8245
katie@fletchergroupllc.com
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