2024
9
UK Digital Channels in Financial Services Market Report 2024
2024-06-24T11:01:42+01:00
REPCEF05943_A9D0_434C_A18E_9E41E18313CE
2195
173910
[{"name":"Financial Services","url":"https:\/\/store.mintel.com\/industries\/finance\/financial-services"}]
Report
en_GB
70% of adults agree that the cost of living crisis highlights the importance of having access to a diverse range of communication methods. Amid ongoing financial pressures, digital channels allow…

UK Digital Channels in Financial Services Market Report 2024

£ 2,195 (Excl.Tax)

Report Summary

70% of adults agree that the cost of living crisis highlights the importance of having access to a diverse range of communication methods. Amid ongoing financial pressures, digital channels allow consumers to address concerns without fear of judgment, while traditional methods like in-person conversations offer personalised reassurance. By enhancing and diversifying their communication strategies, financial services can better meet the needs of their customers during these challenging times.

Digital Channels in Financial Services – Consumer Trends

As consumers increasingly rely on digital platforms, the risks of data breaches and cyber threats rise, potentially compromising personal information and eroding trust. In fact, 22% of adults, who haven’t used digital channels, cite security concerns as their reason for not choosing to contact a financial services provider digitally. Ensuring robust security measures and continuously updating protocols are essential to mitigate these threats and maintain consumer confidence in digital channels.

More than half of Gen Z and Millennials agree that financial services providers should offer AI-powered virtual assistants that give people personalised guidance. By adopting AI, providers can enhance personalisation, streamline operations and strengthen relationships with tech-savvy customers, driving long-term growth and innovation.

This report looks at the following areas:

  • Use of digital channels in financial services
  • Types of devices used to contact providers
  • Perceived benefits of digital channels
  • Barriers to digital channels
  • Attitudes and behaviours towards digital channels

Meet The Expert

This report is written by Mintel’s Senior Financial Services Analyst, Stefania Apostol. Stefania joined the Financial Services Reports team in March 2021, having previously worked for Mintel’s MFD, Disruptor and GNPD products.

Consumers value both digital and traditional channels, so providers must ensure a smooth transition and build trust in digital interactions.

Stefania Apostol - Financial Services AnalystStefania Apostol
Senior Financial Services Analyst

Table of Contents

  1. Executive Summary

    • Opportunities
    • Ensure a smooth transition to digital channels
    • Reassure consumers about digital security to build trust
    • AI can offer growth opportunities
    • Market dynamics
    • Digital banks maintain the lead in overall service quality
    • Graph 1: overall personal banking service quality in Great Britain, 2023
    • Bank branches continue to decline
    • Graph 2: bank and building society numbers, 2010-23
    • More people are managing their finances on smartphones
    • Graph 3: smartphone activity – ‘managed my finances’, 2019-24
    • Most people are still feeling the effects of higher prices
    • Graph 4: “Have you been affected by any of these issues over the last two months? Please select all that apply.”, 2024
    • What consumers want and why
    • Consumers value both digital and non-digital channels
    • Smartphone continues to be the most commonly used device
    • Graph 5: device used to contact financial services provider in the last 12 months, 2023-24
    • Digital channels are the go-to for straightforward tasks
    • Graph 6: preferred method of contacting a financial services provider, 2024
    • Convenience is seen as the main benefit of digital channels
    • Graph 7: benefits of contacting financial service providers digitally, 2024
    • Despite digital channels’ popularity, they do not meet everyone’s needs
    • Graph 8: barriers to digital channels, 2024
    • Strong demand for a mix of digital and traditional methods of communication
    • Graph 9: attitudes and behaviours towards digital channels, 2024
    • Future interactions are expected to increasingly rely on digital channels and VR
    • Graph 10: attitudes and behaviours towards digital channels, 2024
    • Innovation and marketing
    • Financial services providers focus on AI
    • Lloyds Bank introduced in-app passport scanning to improve the banking experience
    • Nationwide enhances digital accessibility for Deaf customers
  2. Market Dynamics

    • Market background
    • Digital banks maintain the lead in overall service quality
    • Graph 11: overall personal banking service quality in Great Britain, 2023
    • Starling Bank leads in online and mobile banking services and overdraft service
    • Graph 12: overdraft services quality in Great Britain, 2023
    • Graph 13: online and mobile banking service quality in Great Britain, 2023
    • Nationwide rises to first place in branch service quality
    • Graph 14: personal banking service quality in branches in Great Britain, 2023
    • Bank branches continue to decline
    • Graph 15: bank and building society numbers, 2010-23
    • Device ownership is widespread
    • Graph 16: device ownership, by age, 2024
    • More people are managing their finances on smartphones
    • Graph 17: smartphone activity – ‘managed my finances’, 2019-24
    • Traditional current account providers continue to dominate…
    • Graph 18: current account providers by consumer use of main and other current accounts, 2023
    • ….but digital challenger banks are gaining more customers for additional accounts
    • Additional accounts appeal through app performance
    • Graph 19: use of additional accounts due to superior app performance, by age, 2023
    • Macro-economic factors
    • Economic output has stagnated since the cost of living crisis began
    • Graph 20: GDP, 2021-24
    • Inflation declines but still affects consumers’ finances
    • Graph 21: CPI inflation rate, 2021-24
    • Consumer sentiment: the recovery has begun …
    • Graph 22: the financial wellbeing index, 2016-24
    • …but most people are still feeling the effects of higher prices
    • Graph 23: “Have you been affected by any of these issues over the last two months? Please select all that apply.”, 2024
    • Regulatory and legislative changes
    • FCA’s Consumer Duty comes into effect
    • The Financial Services and Markets Act 2023 protects access to cash
    • The Digital Markets, Competition and Consumers Actaims to enhance consumer protection
  3. What Consumers Want and Why

    • Use of digital channels in financial services
    • Consumers value both digital and non-digital channels
    • Graph 24: channels used to contact financial services provider in the last 12 months, 2024
    • Younger generations show a strong preference for digital channels…
    • Graph 25: use of digital channels to contact financial services provider in the last 12 months, by generation, 2024
    • …but non-digital channels are still important across all generations
    • Graph 26: channels used to contact financial services provider in the last 12 months, by generation, 2024
    • Phone calls are a popular method for contacting financial services providers
    • Graph 27: channels used to contact financial services provider in the last 12 months, 2023-24
    • Bank branch visits decline alongside closures
    • Email is the preferred digital contact method
    • Graph 28: digital channels used to contact financial services provider in the last 12 months, 2024
    • Providers need a balanced focus on digital and traditional channels
    • Graph 29: repertoire analysis of channels used to contact a financial services provider in the last 12 months, 2024
    • Preferred devices
    • Smartphone continues to be the most commonly used device
    • Graph 30: device used to contact financial services provider in the last 12 months, 2023-24
    • Younger generations rely on smartphones for financial interactions
    • Graph 31: use of smartphone and smartwatch to contact financial services provider in the last 12 months, by generation, 2024
    • Smartwatch usage rises for contacting financial services
    • Laptop and desktop computer are preferred by older generations
    • Graph 32: use of laptop/desktop computer to contact financial services provider in the last 12 months, by generation, 2024
    • Preferred method of contact for services
    • Sensitive and complex issues lead consumers to non-digital channels
    • Graph 33: preferred method of contacting a financial services provider, 2024
    • Phone calls are the favoured method for reporting fraud concerns…
    • …while face-to-face interactions are preferred for financial advice
    • Digital channels are the go-to for straightforward tasks
    • Benefits of digital channels
    • Convenience is seen as the main benefit of digital channels
    • Graph 34: benefits of contacting financial service providers digitally, 2024
    • Immediate access to information is valued by consumers
    • Younger generations are more likely to see enhanced security as a benefit of contacting financial service providers digitally
    • Graph 35: selected benefit of contacting financial service providers digitally, by generations, 2024
    • Barriers to digital channels
    • Despite digital channels’ popularity, they do not meet everyone’s needs
    • Graph 36: barriers to digital channels, 2024
    • Many still prefer in-person interactions
    • A significant minority have security concerns
    • Help non-digital users overcome their lack of confidence and familiarity
    • Attitudes and behaviours towards digital channels
    • Face-to-face interactions continue to play an important role
    • Graph 37: attitudes and behaviours towards digital channels, 2024
    • Many people feel pushed towards digital channels by branch closures
    • Graph 38: agreement with the statement ‘Bank branch closures are pushing people towards digital channels’, by generation, 2024
    • Balance digital channels with personal engagement to build trust
    • Strong demand for integrated and efficient communication experiences
    • Graph 39: attitudes and behaviours towards digital channels, 2024
    • A mix of digital and traditional methods of communication is needed for complex financial matters
    • Cost of living crisis highlights the need for diverse communication methods
    • Future interactions are expected to increasingly rely on digital channels and VR
    • Graph 40: attitudes and behaviours towards digital channels, 2024
    • Most adults support using personal data for tailored services, but scepticism remains
    • Future potential for AI-powered virtual assistants in financial services
    • Graph 41: agreement with the statement ‘Financial services providers should offer AI-powered virtual assistants that give people personalised guidance’, 2024
  4. Innovation And Marketing Trends

    • Competitive strategies and launch activity
    • The big 4 banking groups focus on digitalisation
    • Santander refreshes its mobile app
    • NatWest upgrades Cora using AI for better customer experience
    • Revolut launches AI-scam detection feature to reduce fraud
    • Klarna introduces AI assistant
    • HSBC joins quantum-secure communications network
    • Lloyds Bank introduced in-app passport scanning to improve the banking experience
    • Nationwide enhances digital accessibility for Deaf customers
    • Apple introduces Open Banking integration for Wallet
  5. Appendix

    • Data Sources, abbreviations and methodology
    • External data sources
    • Abbreviations and terms
    • Consumer research methodology

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