News | 20 April 2022

Evolving trends in the financial services industry

Insights from YouGov study on the changing financial ecosystem and the role of money

Greater digitisation coupled with the effects of the pandemic have profoundly impacted consumer behaviour around financial services, according to a new YouGov report. The research, which spans 18 international markets and captures responses from over 20,000 individuals, offers valuable global insights into evolving trends in the financial services industry. We’ve condensed the report’s five most compelling takeaways below:

Buy Now, Pay Later (BNPL) is the industry’s biggest disrupter

The report identifies BNPL as a major disruptor to the global financial industry’s current landscape, with adoption significantly higher among the 25-34 age group. Although YouGov suggest that greater uptake from younger consumers could be attributed to certain attitudes towards money – such as less discomfort with personal debt and less financial security. You have to wonder whether thes consumers are aware they are taking on debt and the repercussions this may cause. BNPL schemes are often positioned as convenient and fast payment services at check out. However, by generating profits from merchant deals instead of the traditional model of applied interest on purchases, it’s clear why BNPL is attractive.

Contactless is hot on the heels of cash

Cash remains king globally, but contactless in-store payment methods – cards or smart devices – are fast closing in. The global average from the sample reported 59% cash use in the three-month reporting period, compared to 52% contactless. Denmark leads the way in favouring non-cash payment methods by a 20% gap in favour of contactless, with the UK, Canada and Sweden ranking as the next biggest non-cash consumers. Of all the European countries included in the report, Germany shows the most resistance to contactless, with France striking a balance of equal cash to contactless payments. While everyone agreed that tech will eventually replace cash as a method of payment, globally the 55+ age group has the largest uptake of contactless payment, at 63%.

Crypto curiosity is on the rise

Investment in cryptocurrency is growing – but it has a long way to go before it meaningfully rivals mainstream financial services. The report shows that crypto attracts younger, high earners and risk takers, while older age groups appear much more crypto-averse. YouGov suggests this could be down to lack of trust for its famously volatile nature; issues around confidence in using tech; or even more lifespan “horizon” among younger investors to absorb potential losses.

Interestingly, non-Western economies are significantly more confident with investing in crypto: 17% of the Indonesian market sample reported to hold cryptocurrency at the time of the research, alongside 16% in India, 15% in UAE, and compared to 6% in the UK and Germany, and just 3% in France.

Sustainable investment is a Gen Z priority and arguably a priority for everyone else too.

The likes of green bonds, and investments that have positive ESG impact is up by 4% on the last 12 months. Not so surprisingly, Gen Z, the “audience of the future” (as YouGov calls them) show the most interest in climate-positive investment decisions. Globally, net agreement was high around the question of whether financial services have an important role to play in influencing sustainability worldwide – overall, 44% of the participants in the research aligned with this idea. Every study and research piece we have read from the last 5 (maybe 10) years highlights the same thing: Everyone is interested in sustainability and the impact investments make on the wider world. So can we finally put this idea to bed that it’s not for all and just get on with making better decisions?

Data security is a hot topic

With more and more moves within the industry to convert financial services and products online and in-app-only, it’s impossible to overlook growing anxiety around data security. A staggering 83% of global consumers expressed concerns around using functions such as digital wallets, crypto, or online-only banks. Identity theft and data security was a primary issue for 43%, and 40% were uncomfortable with a perceived absence of person-to-person customer service options for internet-only services. These meaty figures from the report clearly demonstrate that there’s still a long way to go in removing barriers to digital services, and galvanising customer reassurance.

Overall, there is much transformation and fragmentation in the financial services industry, and this is likely to accelerate as competition between traditional industry players and new market entrants intensifies.

If you’d like to chat about anything you have read today, or more generally about how we can help you with your financial services brand, drop me an email.

Author
Jasmin Gerrard,
Strategy & Insights Manager