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.”
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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