Banking Customers Trust Each Other For Advice On Switching To Contactless Payments
Covid means cash is being used less in favour of online payments, contactless cards and mobile wallets. To make the transition to digital services they can trust, customers are prioritising word of mouth and consumer ratings above advertising and social media.
Consumers have had to change their banking behaviour over the past year as a global pandemic prompted governments across the world to impose lockdown measures. This has prompted a surge in ecommerce as well as a massive speeding up of the trend towards contactless payments.
The latest study by London Research, in association with Trustpilot, found that in six major markets – across the EU, as well as the UK and US – more than six in ten consumers are now more likely to use contactless payment methods. At the same time, more than half are less inclined to use cash.
The trend away from cash towards cards and, more specifically, contactless payments was already happening but a pandemic in which coins and notes are a possible cause of infection, has clearly accelerated it.
Rise of the Challengers
It means that consumers are looking for a seamless digital payment experience, prompting many to check out challenger banks. These digital-first organisations make a big play on the ease and speed by which their apps can be set up and the advanced features they offer, such as savings pots, financial reporting and fee-free foreign exchange facilities.
However, just as before the global pandemic occurred, most challenger bank customers are using the new services as secondary, rather than their primary account. With salaries already going into a high street account, and with direct debits to pay bills already in place, it is clear there is still great inertia in switching entirely to a neo bank.
Hence the research figures show that nearly three in four consumers across the markets surveyed still primarily rely on a traditional bank account. However, that does leave nearly a quarter, 24%, using a challenger bank in addition to a traditional account (18%) or on its own (6%).
Cost and Customer Service
The London Research team asked consumers what the big attractions were in choosing a digital bank and the number one priority, for two in three, was cost. Customer service was a close second for 59% of respondents with a great digital experience in third spot for one in two banking customers.
These findings were mirrored in their priorities in choosing a debit or credit card providers. Again, cost, a trustworthy brand and easy mobile set up were the top three considerations.
These priorities show how the public has realigned their priorities beyond the digital experience offered by a bank to include how well it looks after its customers in the teeth of a global pandemic and accompanying recession. This was shown by 38% and 34% of consumers reporting they are now more concerned about the cost of financial services and the security they offer.
We Trust Each Other, But Not Social
It means finding the best advice on which banking and payment brands is hugely important and it is here where consumers are explicit with whom they trust.
Word of mouth and consumer ratings each attract high and medium trust ratings among 86% of consumers. In contrast, at the bottom of the list, advertising has a high trust rating for just 14% of consumers, the same figure seen for social media.
Interestingly, social media attracted is the least trusted of all the digital marketing channels. More than half the market revealed they have a low trust rating for the channel.
The take-out from the research was that banks have been handed two challenges by the pandemic. They need to provide seamless digital banking services that allow people to manage their money and make contactless payments with ease both online or in-store. At the same time, they had to double down on customer service and show customers they were there to help.
How Did the Banks React?
To get an idea of how the impact of this need to provide a seamless digital experience backed up by caring customer service, it is worth looking at how marketing plans were shelved and reorientated.
TSB Chief Marketing Officer Pete Markey reveals that just before the full UK lockdown was called in March 2020, the bank had been about to launch a major campaign. Plans had to be amended instantly to reassure customers that they were being supported through unprecedented times.
“We were about to launch a major new brand-led advertising campaign and so suddenly, like many others, had to change very quickly.”
He added: “We changed our messaging to how we were here to help customers through some very difficult times with details of loan repayment holidays and advice on how to better protect against fraud. We’ve noticed that people have obviously switched more to digital banking and using our app, so we’ve been supporting customers with that.”
It was a similar situation at NatWest where the bank realised it would need to change course quickly to focus on customer needs and, in particular, to stress to vulnerable clients that they were being fully supported.
“We were the first in the UK to offer vulnerable customers a fee-free cash delivery service to their door, with over £4m delivered to customers since it launched in March,” says Hazel Harper, Journey Developer at the bank’s Effortless Payments team.
“We established a dedicated support line for customers over 70 or in isolation. This line was set up to help those most in need and is open 8am-8pm, 7 days a week. We also launched our Companion Card which can be topped up by up to £100 and lets customers pay safely when someone else is shopping for them.”
The past year, then, has not only seen banks having to step up to the mark to offer apps that are easy to set up and use but to also emphasise how they are there to support their users.
It has been a twin challenge around technology and customer service as cash is being increasingly dropped in favour of digital, contactless payments by consumers who need to know they can trust their bank and payment method implicitly.