Study analyzes consumer behaviors and predicts
top trends set to change the payments industry
TORONTO, Oct. 18, 2017 /CNW/ - Gen Z consumers are
surprisingly more likely than any other age group, including Baby
Boomers, to visit a bank branch at least weekly, according to a new
study from Accenture (NYSE: ACN) – reflecting the heavy cash
dependence within their age cohort. The study also found that Gen Z
consumers (survey respondents aged 18-21) are the most active and
engaged group using mobile banking, with all other consumers
preferring online banking as their primary banking channel.
Based on a survey of 1,500 consumers in the United States and Canada, the study, "10 Mega Trends Driving the
Future of Payments," identifies consumers' banking and payments
behaviors, their appetite for next-generation payments products and
experiences, and the trends most likely to drive significant change
in the payments industry in the near- and long-term.
Among the key findings: One in five consumers (20 percent) visit
their bank branch at least weekly, with nearly one-quarter
(23 percent) of Gen Z—more than any other age cohort—accessing
banking services through a branch at least weekly, compared with
only 16 percent of Baby Boomers. Gen Z is also the most likely to
use cash when making an in-store purchase, with 28 percent
preferring cash, compared to only 18 percent of Millennials.
"For college-age consumers whose first jobs tend to be
cash-based, branch usage is more a necessity than a choice," said
Michael Abbott, a managing director
in Accenture's Financial Services practice. "Clearly, Gen Z
consumers prefer to manage their money on mobile devices, but they
still need branches to digitize their earnings. Banks should treat
this branch relationship as a near-term opportunity to deepen their
ties with Gen Z consumers – offering financial education as their
needs grow. But banks should also look at those habits as a clear
sign of long-term demand for cashless mobile payment services."
Online Banking is Preferred Channel Overall in U.S. and
Canada
The study also found that online banking has become the
preferred way for North American consumers to access their banking
services, with two-thirds (65 percent) using online banking at
least weekly. The one exception is Gen Z consumers, as more than
two-thirds (69 percent) of this group prefer to bank via a
mobile app, making mobile the preferred banking channel for today's
youngest consumers.
"Younger consumers are demanding an exceptional digital payments
experience on all platforms — most importantly on their smartphones
— and want to be compensated through targeted rewards, offers and
discounts, at a cut-throat rate," continued Abbott. "These younger
consumers will ultimately force traditional banks and payments
players to either think beyond the functional aspect of mobile
payment apps and create an engaging customer experience, or risk
getting squeezed out of the process."
The survey found that payments usage remained consistent during
the past three years, aside from an increase in debit cards and
mobile wallet apps aligned to retailers, such as Starbucks. Nearly
two-thirds (63 percent) of consumers said they use a debit card for
payment at least weekly, up from 53 percent in 2014 — and closing
the gap with cash, the most frequently used payment method, which
remained flat from 2014, at 66 percent. Mobile wallet usage was
flat in all areas, except for retailer apps, which increased 4
percentage points over the past year, from 16 percent in 2016 to 20
percent in 2017. All other mobile wallet app usage remained flat at
around 14 percent, with no distinct preference between types of
wallets — whether provided by credit card companies, tech giants or
traditional banks.
"We've been tracking consumer payments for several years, and we
are only seeing marginal shifts between payment types year over
year," said Robert Flynn, a managing
director at Accenture and head of the company's Payments practice
in North America. "Mobile payment
adoption continues to be elusive and this is a big challenge for
traditional players, which must create greater value and a superior
user experience in and around the transaction."
Many of the trends Accenture forecasts in the study are driven
by changing consumer behaviors, including:
- Gen Z Rising: Gen Z consumers are more engaged than other age
groups with financial services across all channels, which will
force traditional financial services providers to elevate the
experience they offer across mobile, digital and in-bank platforms,
as consumers continue to visit the branch regularly.
- UX (User Experience) Is the New Gold: Payments have moved
beyond the transaction, and customer experience has become a key
differentiator. Payments providers that redesign the experience
they provide around what customers need will be well positioned in
the future. The survey found that more than 70 percent of
millennials and Gen Z are interested in AI-enabled tools to help
them save money and optimize rewards by managing payments, bill
payment and expenses.
- Mobile Hits Its Groove: Open Banking and application program
interfaces (APIs) will help drive mobile payment adoption, as the
technology enables a single-view of all financial accounts
information. Nearly one-quarter (23 percent) of consumers would use
a digital wallet offered by a bank or non-bank third party and
abandon their current banking mobile app if they could get
aggregated account data on a mobile wallet; nearly half (45
percent) of Baby Boomers are the most likely to ditch their
traditional bank's app.
- Rewards Revolution: Accenture estimates that in 2016, consumers
enjoyed $15 billion in rewards value
through redemption of cash-back, miles and other points. According
to the survey, the number one reason Baby Boomers, millennials and
Gen Z consumers switched their primary rewards card in the past
year was for higher value of rewards in terms of points or value
per purchase; for Gen Xers, the number one reason to switch was for
lower interest rates.
"Existing rewards models have peaked, with providers competing
to squeeze as much value as possible to offer their customers,"
Abbot said. "As consumers' insatiable appetite for value continues
to increase, payments providers will have to find new ways to offer
value if they want to become the provider of choice."
To read the full report, please click here.
Methodology
Accenture Research surveyed 1,000 adults in the United States and 500 in Canada online between
Sept. 1 and Sept. 10. The overall margin of error is +/-
1.55 percentage points at the midpoint of the 95 percent confidence
level.
About Accenture
Accenture is a leading global professional services company,
providing a broad range of services and solutions in strategy,
consulting, digital, technology and operations. Combining unmatched
experience and specialized skills across more than 40 industries
and all business functions – underpinned by the world's largest
delivery network – Accenture works at the intersection of business
and technology to help clients improve their performance and create
sustainable value for their stakeholders. With approximately
425,000 people serving clients in more than 120 countries,
Accenture drives innovation to improve the way the world works and
lives. Visit us at www.accenture.com.
SOURCE Accenture