Google x Known: How digital-first services are changing finance
The financial services industry is in the midst of tremendous change, as digital-first “disruptor brands” are making great strides in wooing and winning customers. We’re proud to have partnered with our friends at Google to explore this massive shift and provide guidance to all financial service providers on how best to navigate this evolving landscape.
It’s clear that more and more digital-first financial products and services have been entering the space in recent years — from neobanks (eg, Chime) and robo investing platforms (Robinhood), to payments providers (Venmo, Cash App), and property & casualty insurtech (Lemonade, Root). We wanted to understand what consumers actually think about these offerings, what motivates (or prevents) them trying them out, and ultimately, if legacy brands are at risk of losing customers. To do so, we designed a robust qualitative and quantitative study with over 6000 consumers across the US.¹
We found:
A fundamental shift in how consumers place their trust in financial services. It used to be that trust was rooted in longevity and brick and mortar: in the physical security of assets. Legacy brands are well positioned to earn this type of trust. But as digital offerings replace physical experiences across the industry, legacy brands no longer have a significant advantage over disruptors. Instead, people are paying attention to the experience of using the service — and this is where the digital disruptors shine.²
This change is led by a large group of early adopters that makes up more than one third of US financial consumers. This group is defined by an outlook of openness and experimentation, rather than a demographic (i.e., this is not a “Millennial thing”: 59% of early adopters are over the age of 45).
As they try new services, expectations change. They are impressed by personalized, seamlessly integrated, user-friendly digital experiences — and it raises their expectations across the industry. For example, 76% say their expectations have been raised by their experiences with payments disruptors.
And they’re likely to talk about them. This is an influential group: they are 1.6x more likely than the average consumer to be considered a financial advisor to friends and family.
COVID-19 is likely to accelerate these changes dramatically. The patterns of experimentation that lead to adoption and shifting trust are expedited in the context of COVID-19: 61% of early adopters are more likely to switch providers in times of economic uncertainty.
Our findings make a clear case for investment in digital transformation. Financial services providers that simplify consumers’ financial lives through streamlined user experiences will attract the early adopters and earn their trust.
Check out the full Data Short at Think with Google.
To learn about our custom research capabilities, email us at hello@known.is.
¹ Qualitative research (Feb 2020): 6 focus groups across Nashville and Chicago with n=36 respondents across three disruptor adoption profiles representing the spectrum from traditional consumers to early adopters. Quantitative research (March-April 2020): An online survey among n=6025 household financial decision makers in the US between the ages of 18–74. Weighted to US census for age, gender, income and region, and quotas of n=250 set for disruptor brand adopters in each sub-vertical (achieved through natural fallout). Behavioral data was appended for n=1000 consumers, and behavioral data was also collected for an additional n=500 consumers with frequent disruptor brand usage for clickstream analysis.
² Google/Known, “Finance: In the Age of Disruption. Full Quantitative Report with Behavioral and Clickstream Analysis.” May 2020. All claims cited here are from this report.
