A report by cross-border payments firm Currencycloud has examined the recent and future trends related around bundling in financial services.
The report – titled Elastic Bundling in Financial Services – harvested opinion from over 9,000 consumers and 504 business across nine different countries. According to Currencycloud, the research is intended to help leaders in financial services ‘make more informed decisions about the products they offer and how they support the consumers they serve’.
Bundling in financial sebanksbarvices is when companies package a range of their products and services together as a single unit, commonly for a lower price than they charge customers to buy each item separately.
The report found that 95% of financial businesses stated they cannot see disadvantages to bundling to their customer, while 88% of financial services claim they see themselves as a one-stop-shop – providing a full suite of financial products to their customers. Compared to this, 47% of consumers said they prefer a one-stop-shop for financial services.
Up to 94% of traditional banks believe they are a one-stop-shop for their customers, with this number falling to 82% amongst FinTechs and challenger banks.
Meanwhile, FinTech companies in Europe and currently much more likely to specialise in offering a specific financial service product when compared to other FinTechs in the US or Asia.
On the topic of business strategy in the regions of the US, Asia and Europe, 53% of US financial business said they were looking to expand their current offering, with Europe and Asia trailing behind at 31% and 21% respectively.
When this same question was asked of traditional banks and FinTechs/Challenger banks, 67% of the latter said they were planning to expand their current offering compared to 30% of traditional banks, while 69% of traditional banks said they were planning to maintain their current offering – compared to 32% of FinTechs and challenger banks.
The report also found that 71% of businesses believe that customers value having their financial services bundled in the past, 95% in the present and 96% in the next five years.
What are the advantages of bundled financial services to the consumer? Up to 93% said it was the ability to access all products in one space, while 96% said it allowed them to integrate and consolidate all financial services products, personalise and create a seamless user experience and provided them with the potential to save time and increase convenience. 97% of consumers claimed it provided them with increased security from cyberattacks and fraud.
One in four consumers – 24% – detailed that they prefer to buy their products and services from a single company. In addition, Currencycloud found that many consumers had concerns about whether bundling would provide them with the value, security and ease of use that they prioritise above all else when they make a purchasing decision.
What drives consumers to pick one bundling provider over another? The report found that one in three consumers said they look for competitive prices above all else when buying products and services. In addition, consumers think low cost, security and ease of access are the most important factors when it comes to why consumers choose certain brands. It was also discovered that the bundling of products or services was the least important driver among consumers influencing their buying decision.
When understanding where the opportunities lie for businesses going forward, Currencycloud found that customers are more willing to embrace bundling for specific products – with 90% citing current accounts and deposit accounts. Meanwhile, consumers prefer different types of businesses to bundle different kinds of financial products for them.
The report also discovered that 63% of companies believe that they, rather than consumers, will lead the evolution of bundling. However, Currencycloud highlighted that the research suggests that those who will prosper have product offerings in areas in which consumers are disposed to accept bundling.
To discover more about what the report found, download it here.