Consumers are turning away from traditional banks and choosing alternative finance products from brand names instead, according to new research from embedded finance specialists Railsbank.
The research also found that traditional banking incentives such as cashback are becoming less popular. Instead, 39 per cent of consumers said that they are interested in accessing financial services like credit, loans, or investments from brands they love and trust.
Just 35 per cent of Brits are happy with the loyalty rewards they get from their bank, while 37 per cent of credit card holders don’t even know what interest rate they are getting.
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“Where legacy finance might be worried, brands should see opportunity,” said Nigel Verdon, chief executive and co-founder of Railsbank.
“Interest and cashback has lost its appeal among consumers. What once worked well will not guarantee future success. Forward-thinking brands are already building financial experiences into their customer journeys, delivering better rewards and experiences that young people value.”
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57 per cent of UK consumers said that they want rewards that reflect their spending behaviour, or tie into their passion, or hobbies.
Young people are particularly interested in alternative rewards options such as charity donations, exclusive access to products and exclusive content compared to the general population.
More than half (52 per cent) of 18-24 year olds are interested in a credit card that would actively support sustainability and the environment with every purchase, and 48 per cent said they would like a credit card which automatically donates to charity with every purchase.
“It’s clear that consumers want a new type of brand loyalty experience; one which shows that they are understood and valued,” added Verdon.
“Younger consumers are more environmentally and socially conscious and brands who want to build relationships with them need to recognise that cashback and financial rewards are losing their power. Major brands, particularly in the music and sports industry, should think about how embedded finance experiences can support loyalty and give customers better experiences.”