Digital experiences have transformed how people spend, save and borrow money. Consumers have not only openly embraced the ongoing digital transformation of the financial services industry but have begun to dictate its future, creating a lasting desire for ease, convenience and variety.
To gauge consumer interest in a one-stop-shop for all their banking needs, Amount collaborated with PYMNTS on a national research study. What we found is that not only do consumers, particularly the Millennials who will make up the majority of a bank's core customer base for the next few decades, tend to view bundled offerings as critical to their banking experience, but credit cards are paramount to the mix:
64% of Millennials would consider leaving banks that don't offer bundled products
Even more, 30% of consumers with credit cards from primary banks that don't offer bundled accounts are very likely or extremely likely to switch FIs.
So what role do credit card solutions play in bundled offerings and nurturing the relationship between financial institutions (FIs) and their customers? Here we break down the top three.
Consumer demand for easy and convenient banking solutions has been one of the primary forces accelerating banks' digital transformation. More than half of consumers with credit cards with their primary bank are interested in simplifying spending by having all their accounts at a single financial institution. Further, Millennials are more likely to be interested in having their accounts at the same institution, suggesting that bundled banking is not only easier and more convenient, but essential to their banking needs.
To meet this growing consumer demand, banks need to take a hard look at their current credit card solutions. Delivering streamlined and friction-free digital application processes not only simplifies and enhances customer experiences, it fosters brand affinity and reduces customer attrition.
As much as consumers prefer bundled banking offerings, 37% of U.S. consumers surveyed still use credit cards from an issuer that is not their primary bank — the highest percentage for any banking product. This indicates that FIs still have a lot of work to do when it comes to their credit card offerings, most notably rewards programs. In fact, four out of 10 consumers interested in bundling solutions are looking for credit cards from their primary bank with good rewards programs.
With costs on the rise, more customers are relying on credit cards for everyday purchases. Savvy consumers are looking for long-term, flexible rewards programs to earn money back on these purchases to help them reach their financial goals. In turn, FIs will be rewarded with increased customer engagement and higher customer lifetime values.
Should you use cash or credit at the grocery store? What's the advantage to using credit when you have healthy cash flow? With so many payment options at their disposal, consumers what to make sure they are making the right choice. This holds especially true for credit-card customers: 44% of consumers with credit cards from their primary bank are "very" or "extremely" interested in payment recommendations from their bank, compared to just 27% of customers without credit cards at their primary bank.
Offering payment recommendations helps credit card customers, particularly those with several credit cards, better manage their card use and spending while building greater trust in their financial institution. Guiding customers to the card with the best rewards or lowest interest rate for a purchase goes a long way toward assuring customers their purchase decisions align with their financial goals.
To succeed in today's highly competitive market, FIs need to strengthen their relationships with customers and foster long-lasting loyalty. The FIs that are the most skilled at offering appealing products and services, particularly to credit card holders, will be best positioned to maximize profitability and thrive for the long term.