Banking on the Subscription Economy: Consumer demands drive the shift to services from their banks
- 29.10.2019 02:30 pm
Zuora®, the leading cloud-based subscription management platform provider, has unveiled research about a striking shift in consumer sentiment towards banking services. Nearly half (44%) of consumers would consider switching to banks on a subscription basis in return for personalised service bundles. This is significant in that over one-third (35%) of all UK consumers have never switched their bank. A standardised package isn’t enough to entice change, instead they want tailored offers and 60% of consumers will allow analysis of their purchasing data to get this.
The UK-wide study of 1,000 consumers, conducted by CitizenMe with Zuora, looked into what people want from their bank. The report found that UK consumers, who are notorious for never switching banks despite offers, showed over half (52%) of respondents would be enticed to switch banks if their subscription included an entertainment bundle. This was followed by smart phone insurance (33%) and utility services (31%).
The report found that there is a clear appetite for subscription services amongst consumers. Results showed 70% subscribed to entertainment (video and music) services, followed by insurance (52%) and grocery services (29%). Now the demand is on for a shift to subscription banking.
Consumers are looking for more than just financial incentives from their banks, rather they want personalised services that add value to their lives beyond a transactional level. The survey found that consumers want tailored over the top services based on their spending habits, with the majority (68%) open to paying a recurring fee to access these additional personalised services.
“Just like Netflix created new ways to consume television, the time is now for the financial services industry to shift to a subscription-based model. As younger fintech companies continue to disrupt the financial services industry banks need to re-establish their roles as trusted financial advisors. It’s clear the tides are turning and the survey results are evidence that banks will have to do more to earn loyalty now,” said Zuora Managing Director for EMEA, John Phillips.
Additional report findings include:
· Nearly 6 in 10 consumers would be willing to share their transaction details in return for services that bundled their subscription payments and regular outgoings
· A quarter of respondents (26%) would be willing to pay £5-10 per month for their bank account if it included these services
“The interest from respondents in additional services shows the opportunity for these banks to invest in subscription services to secure recurring revenue stream, which serve not only to retain existing customers but also draw in those willing to switch. In return for loyalty, customers expect more value added services that are delivered in a personalised way, and the research shows they’re willing to pay for it,” said Phillips.
Earlier this year Zuora launched its Subscription Economy Index report, which shows that an average subscription-based company increased its revenue by 321% compared to 2012. Importantly for the banking industry, this growth was driven by subscriber acquisition over average revenue by account