Unique ethnographic study reveals European customer attitudes towards their relationships with financial institutions
Finastra recently published a unique ethnographic study into people’s relationship with their finances. We spoke to a wide range of consumers to understand what “financial empowerment” means to them and how they might achieve it.
Our conversations with people in Europe, specifically Germany and the UK, revealed the roles that different types of financial institutions play in helping them to understand their money and make the most of it. The findings confirm that in both countries, technology played a crucial role in helping them to feel in control of their money.
People want knowledge, control and freedom
Analyzing all the feedback from the global survey showed that people need three “enablers” to feel financially empowered (which we define as the feeling that people can either fulfil their financial goals or comfortably work towards them). The first is knowledge: the sense that people know what’s happening with their money. The second is control, or the feeling that people are ready and able to put their own financial plan into action. And the final enabler is freedom – the peace of mind to enjoy their finances, to spend without guilt and save and invest in an active way.
Technology makes customers feel engaged and in control
In Europe, respondents include people who use ‘traditional’ branch bank accounts and those who use digital banking and apps. The results show that increased technology helps customers feel engaged and in control of their finances. It also helps them to view their bank as more than somewhere to keep or save money. They see themselves at the center of the banking relationship and can manage everything with a mobile app. “Banking wasn’t that difficult after all” sums up how many report they feel. Banks utilizing technology are delivering for retail customers across all dimensions our financial empowerment study confirms.
The banks with richly featured apps are giving people the knowledge they need: this was particularly important for younger respondents, who had no expectation of financial support in the future and felt they would have to do everything themselves. And the more interaction and capability that people can access, the more they feel they are in control. One app, for example, uses an algorithm to determine how much a customer can save and automatically shifts the funds into a savings account. Finally, by creating an easy-to-visualize picture of people’s finances and using relatable, everyday language, digital-first banks are giving people the freedom to spend and save with confidence.
Customers are ready to work with organizations that can help them feel financially empowered
Neobank user Teresa explains what this new banking relationship means: “I feel not just more empowered, but I also feel calmer because now I’m in control and there is nothing nagging in the back of my head. I feel confident because I know what I’m doing, and I have the resources to look into it.”
Ultimately, the findings from our research point to a big opportunity for any financial services firm to implement the right technology to empower their customers. Challenger banks are already doing this well and many incumbents are starting to catch up. Customers are ready and willing to take control of their finances. They will quickly build trusted relationships with providers that can help them on their journey to financial empowerment by giving them the knowledge, control, and freedom that they want.
To learn more, download The journey to financial empowerment
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