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Affluent Singapore middle class turn to banking apps

Banks in Singapore risk losing customers if they fail to keep pace with the digital preferences of the affluent middle class in the country

Some 81% of Singapore’s affluent middle class use banking and finance apps to engage with financial service organisations, according to a report by Collinson Group.

The report said that this presents financial services institutions with an opportunity to engage with the group but also put them at risk of being left behind if they fail to meet the digital experience expected by these customers.

Collinson Group polled 6,125 of the top 10-15% of earners in 10 countries including Singapore.

The study revealed that more than half (55%) of affluent middle class consumers in Singapore prefer to do their banking online or through a mobile app, 57% make digital payments whenever they can, and 52% believe mobile banking is incredibly important.

Digital wallets such as Apple Pay, Google Wallet and PayPal are used by 40% of affluent middle class consumers in Singapore, and digital vouchers on a smartphone are used by 34%.

A similar trend is apparent in mainland China and Hong Kong, where 95% and 84% respectively of the affluent middle class use banking and finance apps to engage with financial institutions.

Millennial influence

Collinson Group said millennials and Generation Z are pushing companies to innovate faster and will increasingly define customer expectations as their spending power grows over the next five years. Born in the age of instant communication, smart technology and a hyper-connected world, these young consumers are already influencing digital transformation.

“Digital will be the biggest battleground in financial services as digitally native millennials and Generation Z become more lucrative target audiences for the sector,” said Collinson Group director Christopher Evans. “We can expect to see digital engagement continue to soar over the next three to five years.”

Less loyalty

Evans went on to say: “The way people shop and the way they interact with loyalty programmes has changed. Millennials and Generation Z, for example, typically engage across five screens simultaneously.

“Their relationship with brands is also completely different. They want instant gratification and claim not to want to save up loyalty points over a longer period to access a reward.”

Research by the firm found that loyalty programme membership in the financial services sector had declined by 44% globally in the past two years because brands are not providing reward programmes that customers value, and not engaging customers in their preferred channels.

The research also found that brands that get it right are reaping the benefits. Banking loyalty programmes can encourage 82% of members to spend more, while credit card initiatives positively influenced 79%.

Sui-Jon Ho, senior market analyst at IDC Financial Insights, agreed that affluence or buying power is a factor contributing to the higher levels of digital engagement.

Read more about digital banking in Southeast Asia

Ho added: “However, this comes alongside a myriad of other drivers. Education, peer influence, culture and geography, among others, all converge to dictate an individual’s proclivity to adopt digital technologies.

“The strength of each driver varies from one country to another. In Vietnam, for example, mobile digital wallets are broadly used across all social/wealth classes, and this could be traced back to relaxed regulations on informal financial service providers, immature local banks and opportunistic telcos. Here, the e-commerce sector rapidly digitalised in the absence of viable analogue alternatives.”

Ho said that while Singapore banks continue to be at the forefront of digital financial services in the Asean area, many banks in the region have already applied “digital disciplines” to improve their logistics for product and service delivery.

Read more on IT for financial services