Banking and finance app usage rises 17% amongst affluent middle class customers, sounding a warning shot for loyalty initiatives

25 July 2016

Financial services brands looking to engage affluent middle class customers risk being left behind if they don't meet the expectations of these valuable customers in terms of digital experiences, research released today by Collinson has revealed. It found that 81 percent of affluent middle class customers use banking and finance apps - up from 69 percent in 2014. It also revealed that the majority of customers (53 percent) prefer to do their banking online or via mobile app, while 47 percent prefer going into a branch or on the telephone.

Collinson polled 6,125 of the top 10-15 percent of earners from Australia, Brazil, China, France, Hong Kong, India, Singapore, the United Kingdom, the United States of America and the United Arab Emirates. 

Other key insights from the research which defines how affluent middle class consumers interact with financial services organisation include:

  • 63 percent make digital payments whenever they can
  • 57 percent say mobile banking is incredibly important
  • 38 percent use digital wallets (including Apple Pay, Google Wallet or PayPal)
  • 31 percent use digital vouchers on a smartphone

Collinson warns that financial services brands must act now to upgrade their loyalty infrastructure as the spending power of Millennials and Generation Z is set to soar in the next five years. Millennials are pushing companies to innovate faster and are defining new customer expectations. Born in the age of instant communication, smart technology, and a hyper-connected world, these young consumers are 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. We can expect to see digital engagement continue to soar over the next three to five years. Brands need to act now in order to improve their digital offering, or risk missing the opportunity to build loyal relationships with lucrative audience segments," said Christopher Evans, Joint CEO at Collinson.

In the 2014 series of this study, Collinson identified four global tribes, or groups of people, who share common traits that cut across age, gender and international boundaries. These tribes provide deeper insight into the motivations of the affluent middle class, and their digital use in 2016:

 Tribe  Key personality
 Prefer to bank
 Use banking and
 finance apps
 Use digital
 Say mobile banking
 is incredibly important
 Tech enthusiasts  56%  91%  50%  68%
 Want the finer things in life  47%  89%  28%  71%
 Experientials  Crave money can't buy
 52%  81%  36%  57%
 Motivated by family and
 helping others
 53%  73%  34%  49%

The financial services opportunity

"The way people shop and the way they interact with loyalty programmes has changed. Millennials and Generation Z for example, typically engaging 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."

"But the traditional financial services firms have a clear opportunity to deliver highly engaging, digitally driven loyalty initiatives due to the wealth of data they collect. They need to go further in terms of using this data to improve targeting and segmentation to appeal to distinct audience groups. Banks really need to develop their own loyalty identities,"
said Christopher Evans, Joint CEO at Collinson.

Recent research from the firm found that loyalty programme membership in the financial services sector had declined by 44 percent globally in the past two years. This decline was driven by brands not providing rewards programmes that customers value, and not engaging customers in their preferred channels. This research also found that brands getting it right are reaping the benefits, with banking loyalty programmes found to encourage 82 percent of members to spend more, while credit card initiatives positively influenced 79 percent.

"Digital loyalty initiatives can be far more cost effective than more traditional methods. By levering data and delivering highly personalised loyalty rewards at the appropriate time, brands can form emotional connections with customers and create additional sales opportunities across their organisation. Embracing digital tools will allow brands to communicate and engage their customers in more meaningful ways, and digital applications can be used to drive bank wide loyalty. Doing this will help create active digital footprints and take the next step beyond loyalty to fully fledged brand advocacy,"
Mr Evans concluded.

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