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The Future of Financial Services 2021: The Good, Bad and Ugly About Fast Money

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  • 18 Pages
  • September 2021
  • Region: Global
  • Arizent
  • ID: 5715069
Introduction Influenced by expanding digital technologies, consumers are increasingly expecting fast money movement in all parts of their financial lives. If everything works quickly, a customer will hardly notice, and will be more willing to conduct repeat business with the institution. Yet, if things don’t, not only is a customer disappointed, but it also opens the door for a rival.

As financial services continue to evolve, and money movement speeds become faster, the need to understand consumer demands and expectations becomes more critical in order to drive success for organizations that deliver financial services, as well as the vendors that enable them. This report analyzes the impact of what happens when financial organizations meet consumer expectations on fast money movement. It also highlights potential threats on the horizon that indicate consumers are only going to demand faster money movement in the future.

Key findings include

  • Consumers have high money movement satisfaction levels for some transactions, such as P2P money transfers and opening checking and savings accounts, while other transactions, such as mortgage closing, receiving tax refunds and payment of insurance claims, are not as high. These experiences matter, with roughly 8 out of 10 customers reporting that the speed of money movement had a positive impact on their willingness to continue to do business with an institution.
  • Most consumers (92%) are willing to take extra steps to authenticate their identity when transferring money or opening financial accounts to help mitigate fraud. The most popular tools consumers are willing to engage with during extra authentication steps are PINs and passwords. Unfortunately, more advanced tools, such as geolocation, fingerprint and facial recognition, don’t have the same levels of consumer willingness to engage. Despite general consumer reluctance, the asset-wealthy are more willing to engage in video chat, knowledge-based authentication (KBA) and geolocation for money transfers, so these may be options for financial institutions (FIs) when conducting high risk/high value transactions.
  • Slow money movement has a negative impact on FIs as consumers abandon transactions and find better options to send their money quickly. About 21% of consumers reported that they have abandoned a financial transaction because the speed of money movement would take too long, with higher rates among the employed, high income earners and primary financial decision makers. A clear example of consumers shifting their business due to slow money movement is how the segment of bank bill pay lags behind paying bills directly through a biller’s website/app as a preferred customer behavior.
  • Consumer adoption of P2P money transfer services has grown and there is a desire to use it to make purchases, pay bills and fund new financial accounts, creating a potential threat to existing FIs. Currently, about half of consumers under the age of 40 use P2P services at least weekly, if not more. Additionally, two-thirds of consumers reported interest in using P2P for shopping in stores and online as well as paying bills. Over half are interested in using P2P as a funding tool for newly opened financial accounts.
  • The strong interest in faster paycheck access being offered by challenger banks is an example of how new fintech solutions could pose a major challenge to existing FIs through an increasing demand for faster money movement. Overall 70% of consumers would be interested in faster paycheck access, defined as by up to two days earlier, with 82% of Gen Z and 78% of millennials being interested. About three-quarters of millennials and two-thirds of Gen X and Gen Z reported that faster paycheck access would have a positive impact on their decision to switch their primary FI to another institution.

About this report

The publisher conducted this survey to explore the impact of faster money movement on the future of financial services - what it means for those who are able to deliver and what it means for those who don’t - as well as the growing threats to traditional legacy organizations as consumer demands continue to grow and evolve. The survey was conducted online in the U.S. with 941 adults, ages 18-74, during June 24 - July 15, 2021, and is reflective of the general population based on a number of demographic factors including race, gender, etc., as well as being representative of all U.S. geographic regions.

Table of Contents

  • Introduction
  • Consumers are satisfied with some transactions, less so with others
  • Satisfaction with the speed of money can drive repeat business
  • Most consumers are willing to help fight fraud - especially the rich
  • Slow money leads to abandoned transactions, especially among desirable customers
  • When money moves too slowly, consumers find faster options
  • Growing P2P adoption could cause disruption due to its faster money movement speeds
  • Faster paycheck access is enough to drive customer attrition
  • Conclusions

Companies Mentioned

  • Chime
  • Current
  • Huntington