Global analytics software platform provider, FICO, today released new research examining consumers’ shifting financial behavior and priorities. While the vast majority of US consumers (86 percent) are satisfied with their banks, they are increasingly open to working with new providers, including fintech companies and other non-bank providers, to address critical unmet financial needs.
The research, conducted by Cornerstone Advisors and Nonfiction Research, asked US consumers what they considered crucial to their financial future and explored the types of products and services they were interested in to secure that future.
“Consumers’ expectations for banks are constrained by the products they have traditionally offered,” said Anna Hamilton, vice president of Portfolio Marketing for Customer Development at FICO. “While consumers continue to express positive sentiment towards their banks, our research has revealed a vast set of urgent financial needs that a majority of banks are currently not solving for.”
The research found that US consumers are beginning to address these unmet needs by turning to non-bank financial services providers as opposed to traditional banks or credit unions. 34 percent of consumers have at least one account with or engage in financial services activity with a fintech company, large technology company, merchant, or other non-bank provider. That percentage jumps to 47 for Millennials.
“Shadow banking providers are siphoning a growing amount of business away from traditional providers, often in ways that are difficult to detect,” says Ron Shevlin, managing director of Fintech Research at Cornerstone Advisors. “For example, a quarter of a trillion dollars—$252 billion—in payments volume is now happening outside of banks’ payment products.”
A key factor driving this migration to non-traditional financial services is consumers’ growing uncertainty over their monthly finances. More than two-thirds of consumers (68 percent) experience high-stress about money every single month, while 53 percent say they aren’t on track financially.
As a result, fintechs like Chime and Petal, who offer specialized services to help consumers with their financial futures, have been growing in popularity. Almost a third of millennials (31 percent), a quarter of Gen Xers (27 percent), and one in five Gen Zers (19 percent) express strong interest in these services.
Read More: How the Trends of Today Affect Financial Institutions Tomorrow
