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Young generation tempted by Amazon bank-like services

Tech firms offering banking services will be inevitable in the future as more than half of young people are tempted by such a prospect

Over half of 18 to 34-year-olds would consider using banking services provided by big tech firms such as Amazon and Google, because they are convenient and personalised.

According to a survey of more 8,000 consumers worldwide, carried out by Salesforce-owned MuleSoft, 52% of the age group would consider these suppliers for banking services, compared with 34% of all age groups.

Amazon is already in talks with US banks about opening current accounts in the US in partnership with them.

In the MuleSoft survey, simplicity and more personalised services were cited by 42% and 23% of global consumers respectively as most popular reasons for choosing Amazon, Google, Facebook or Apple for banking services.

These companies live and die by the quality and ease of use of their interfaces with customers. Consumers want the same level of usability from their banking services.

But consumers report being frustrated by how long it takes to receive certain services from traditional banks, and they expect better. For example, the survey found 57% of consumers believed opening a new account should take less than an hour, while 47% said applying for a mortgage should take less than a day.

Young people also want to communicate with banks on platforms they use in their personal lives. Over half (56%) would like to use services such as WhatsApp or Facebook Messenger to securely interact with banks.

Read more about open banking and PSD2

  • The government’s Competition and Markets Authority has requested feedback on proposals to increase competition in the UK banking sector.
  • The Competitions and Markets Authority opens up the banking apps market following an investigation into how to create greater competition in banking.
  • With the EU’s Payment Service Directive (PSD2) taking effect in January 2018, banks have no time to waste in preparing for the changes it will bring.

When it comes to personalisation, consumers enjoy the experiences offered by the likes of Google and Amazon. Banks need to improve and have an opportunity to do so following new rules introduced this year by regulators. But these same rules could also mean they face new competition.

The latest payment services directive across the EU and open banking rules specific to the UK mean banks have to make customer data available to third parties through application programming interfaces (APIs), if approved by the customer.

This will inject competition into the banking sector, but traditional banks can offer their own personalised services if they take advantage of the regulations.

For example, as part of its PSD2 strategy, BNP Paribas Fortis is integrating consumer financial management software from financial services (fintech) firm Tink into its mobile banking apps to utilise data from customers’ multiple financial service providers to aggregate their finances.

Meanwhile, HSBC responded to the open banking regulations by launching Connected Money, an app that enables users to view all their bank accounts, regardless of supplier, on a single screen.

Globally, MuleSoft’s report found that 61% of 18-34 years olds were happy for banks to share their transaction data with third parties if it delivered a more personal user experience. But Brits were less willing, with just 35% in favour of this.

Brits were also found to be cautious when it came to using automated banking customer services. Just 15% of British consumers had used chatbots to engage with their bank in the past year, compared with 25% globally.

Overall, people in Singapore (47%) and the US (43%) were the most open to using tech companies as a banking provider, while consumers in the Netherlands were least in favour (22%).

Read more on IT for financial services

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