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Singapore consumers very open to buying financial products from big tech firms: Bain study
A SURVEY by management consultancy Bain & Co highlights the inroads that big established technology giants could make on turf traditionally occupied by retail banks.
The study found that 75 per cent of Singaporeans are willing to try out financial products from the likes of Amazon, Apple, Alibaba and Tencent. Interesingly, only 46 per cent would so with a start-up.
While many traditional retail banks see financial technology (fintech) firms as the primary disruptors to banking, said Bain, "it seems like the established technology players have emerged as the bigger, more immediate threat to retail banking".
Bain said its survey showed big tech companies have earned a high degree of trust among consumers. Among US and UK consumers, specifically, PayPal and Amazon are trusted almost as much as banks by those polled.
"Fintechs have innovative products, but they struggle to build brand recognition or a distribution model that attracts many customers," said Gerard du Toit, head of Bain's banking practice and lead author of its eighth annual retail banking report.
"On the other hand, large technology firms have the advantage as they are already accessible to most - which put them in a better position to extend their corporate brands into banking, he added. "Many also already sell payment services, credit cards and loans, so it's plausible they will offer a suite of retail banking services in the near future."
Bain found that across most countries surveyed, at least half of those polled would try financial products from big tech firms. This was more so countries where traditional banking is more time-consuming and cumbersome. Thus for countries like India and Mexico, 91 per cent and 81 per cent of respondents respectively said they would do so. In China - where non-bank payment systems like Alibaba's Alipay and Tencent's WeChat Pay flourish - 88 per cent replied in the affirmative.
Bain said that traditional banks have also barely touched technologies such like virtual reality or the use of personal voice assistants like Apple's Siri or Google Assistant.
Ultimately, banks that are able to speed up the development of their digital channels to handle more routine transactions are more likely to gain customer confidence and a cost advantage that will better equip them to compete with tech firms, Bain said.
Gwendolyn Lim, a partner in Bain's Singapore office said: "The more transactions that digital channels are able to accommodate seamlessly, the more customers will use them instead of the call centre or branch."
"The reduction in 'bad' call and branch volumes allows banks to reinvest more to further improve digital channels, while reserving their employees for the thorniest problems."
Bain surveyed more than 133,000 consumers in 22 countries.