Whether a Bank of Facebook is months or years away from happening (if it ever does), it’s never too soon for banks to gird themselves against a competitive assault from big tech.
The bad news for banks is that customers would be more tempted than ever to make the switch: 58% of people who are open to, or actively mulling, a change of banks told Novantas in a recent survey that they would consider banking with a tech company like Facebook, Google or Amazon if they could. Only 44% had said the same thing last year.
“That’s a real threat that banks have to be cognizant of and prepared for” even if they offer an online-only product, said Matt Sharp, the firm’s head of research. “They would certainly be at risk for losing customers who are technology-minded and have chosen [an online-only] bank in part because of that. A tech company would be able to start picking off those types of customers fairly quickly.”
The good news for traditional players is that participants in the survey dropped hints about how they could be persuaded to stick around. Cash incentives made a difference for many consumers who had opened a checking account in the last few years, and so did a previous relationship with the bank they ultimately chose.
Aside from surveying more than 4,600 prospective switchers, Novantas studied a second group: more than 7,600 consumers who had opened a checking account with an online bank in the past three years. There was some overlap between the two groups, Novantas says.
Read the full article at American Banker