SINGAPORE (THE BUSINESS TIMES) – Younger customers and higher-income individuals are keen to open a digital bank account in Singapore, even as two in five of overall respondents indicated that they would only consider doing so once the digital bank is “popular and successful”.
In PwC’s digital banking customer insights study, over 70 per cent of 18- to 39-year-olds and some 70 per cent of customers in the high-income bracket indicated that they were “very interested” or “interested” in opening a digital bank account.
In fact, customers earning at least $10,000 per month are twice as likely to be interested than those earning $2,500 or less.
This comes as younger customers already conduct much of their daily lives via screens, making them a “natural fit for digital banks”, while the affluent – those with more investable assets and own a wider array of financial products – are seeking better and easier ways to manage their money, said the report.
However, digital banks are not likely to replace existing banking relationships for most.
Some 99 per cent of customers will keep their existing bank account upon opening a digital bank account, while 67 per cent of these will continue to use their existing account as their primary account, the PwC study found.
“This is an important point for digital banks as customers are more likely to use their digital bank as a supplementary account as opposed to switching,” said the report.
“Therefore digital banks should initially look to displace secondary accounts rather than to become a customers’ choice of a primary bank.”
Despite the interest shown by the younger and more affluent segments in Singapore, respondents are still cautious about digital banks.
About 40 per cent of Singapore respondents indicate that they will only consider opening an account with a digital bank once it is popular and successful.
Digital banks also have to get past the “trust” hurdle – a third of customers do not trust digital banks with their data, while one in three does not trust that digital banks will be financially stable.
Moreover, respondents indicated that human touchpoints were crucial for certain types of situations and transactions, such as emergencies, wealth management, mortgage and insurance.
To draw customers to bank digitally, the top financial feature customers want is better rates on deposit and lending (49 per cent), followed by quick and easy online customer service (42 per cent) and a better mobile or digital experience (40 per cent).
The majority of Singapore customers (66 per cent) were also found to be “interested” or “very interested” in having their digital bank offer non-financial features. E-commerce, financial education and lifestyle services such as health, wellness and travel were the most popular.
Mr Andrew Taggart, South-east Asia financial services consulting leader at PwC, expects digital banks to be likely to offer attractive rates and promotions that could erode the digital banks’ margins and possibly impact industry margins in the initial phase to attract customers.
He pointed out that having “spectacular rates” helps to acquire customers in the short run, but digital banks need to create ongoing engagement with their customers if they want to be successful in the long run.
“It will require banks to understand each customer and provide them with what they expect from personalised financial and non-financial products and services, through to a seamless customer experience,” Mr Taggart added.
The PwC study interviewed over 1,501 bank account owners over the age of 18 from Singapore in early October 2019.
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