The race to rebundle the bank - Travelex whitepaper
Nearly 60% of UK consumers want a marketplace from their bank as finance fatigue kicks in
50% increase in fintech accounts held over the last 10 years versus 11% for current accounts from traditional banks
42% of consumers are frustrated with managing multiple accounts with over half considering closing accounts as a result
59% want their bank to consolidate accounts into a marketplace, only 18% wanted a tech company to deliver this
Travelex Currency Solutions today released the findings from its new report The Race to Re-bundle the Bank. It revealed that UK consumers have increased the total number of money-related accounts they hold, with more fintech and challenger bank accounts added than those from traditional banks. Consumers are effectively ‘unbundling’ their traditional bank into disparate services from multiple alternative providers. However, consumers – especially millennials – have become frustrated with managing numerous accounts, and are looking to their incumbent bank to consolidate them into a single marketplace.
Banks have been unbundled
The research, based on responses from 1,000 UK consumers, clearly shows an increasingly loyalty-averse public accruing money-related accounts that cater for discrete financial needs.
The average number of money-related accounts held by consumers has increased markedly over the last 10 years. The number of fintech providers used has increased by over 50%, with e-wallets (80%) and international money transfer accounts (29%) showing the biggest gains. In contrast, traditional banks have only seen an increase of 11%.
Younger consumers in particular have more diverse financial lives. Nearly a quarter of respondents under 36 have three fintech accounts or more.
Historically, consumers turned to their incumbent bank for a range of services. With unbundling consumers are increasingly enlisting a plethora of alternative providers to meet their financial needs, even if their bank has a similar offering.
New rules of attraction
The reason for opening additional accounts is driven by a specific financial need. The primary needs that lead people to stray are budgeting, bill payment and specific services like money transfer. Interestingly, only 11% cite the user experience as a reason to look beyond their current provider.
When selecting a particular provider, consumer focus shifts to “cheaper, better, faster”. In this context, the leading factors are the rate/cost of services offered (31%), the speed of service (29%) – which jumps to 40% for 18-25 year olds - and the user experience (23%).
The race to re-bundle
Traditional banks have been unbundled and disintermediated by alternative providers. This has led to ‘finance fatigue’ as consumers struggle to manage multiple accounts. Now they are looking to their bank for a solution.