Loyalty to UK banks and finance providers is declining
Consumer loyalty to the UK’s banking and finance sector has dropped nine percentage points in a year, according to recent research.
The cost-of-living crisis is leading to a rise in brand switching among UK consumers, with those in financial services being urged to help alleviate this pressure.
A nationwide survey of 1,000 consumers revealed that 63 per cent of UK consumers are loyal to their bank or finance provider, dropping from 72 per cent in 2021.
The data from marketing company Ello also revealed only 10 per cent believe their current bank or finance provider understands them as a customer, with just eight per cent feeling a connection and loyalty to their existing provider.
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Less than one in five (19 per cent) have been loyal to their provider for more than three years and only 16 per cent trust their current bank or finance provider.
The key factors influencing a consumer’s decision to stick with a bank or finance provider long-term, were trust (28 per cent), good customer service (27 per cent), reliability (23 per cent), price (15 per cent) and the quality of product or service (15 per cent).
“The UK’s banking and finance sector has evolved considerably in recent years with the rise in challenger banks resulting in the marketplace being more competitive than ever before,” said managing director of Ello Michael Kalli. “Add a global pandemic, economic crisis and several other factors to the mix, and the sector has an impossible situation on its hands.
“However, during times of economic crisis, consumers typically turn to their bank/finance provider for support in alleviating such pressure and there’s opportunity for those who are fighting for market share to stand out from the crowd when it comes to easing this burden.”
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Ello’s research found that 19 per cent of consumers most wanted brands to show that they listen to and know their customers, while 13 per cent wanted them to absorb some of the increasing costs throughout supply chains, to help with the rising cost of living.
Consumers also want help to offset the cost of living, with 12 per cent saying they like brands to offer discounts at relevant places to secure their loyalty.
Almost one in 10 (eight per cent) said they were more likely to remain loyal if their existing bank or finance provider could help them make cost savings in other areas, such as eating out, food/drink and travel/leisure.
Of the respondents, 41 per cent said they are spending less on out of home experiences, such as eating out, due to the rising cost of living.
A third (33 per cent) said they cannot afford to spend on experiences with friends and family due to the rising cost of living and almost half (43 per cent) think brands should be absorbing rising prices to support their customers.
“While price rises are inevitable, and in many cases out of the control of those across the sector, the data offers some food for thought on other opportunities to ease the impact of the escalating economic crisis on consumers,” Kalli added.
Read more: Demand for consumer credit returns to pre-pandemic levels
