YouGov, TrueLayer research reveals 5 payments trends impacting digital wealth management
TrueLayer, the leading technology company building financial infrastructure that’s open to everyone, today revealed the results of its latest research, produced in association with YouGov, into the payments trends shaping the wealthtech market.
Financial technology has evolved rapidly over the past decade, improving and automating the delivery of many financial services. The wealthtech industry, comprising trading, investing and wealth management, is no exception. As new customers turn to trading and investing platforms, providers will have to fight harder for loyalty, particularly for digital natives who have higher expectations of a frictionless experience and no qualms about switching providers.
The research*, which surveyed more than 1800 current users of online wealth management services and 1400 consumers who are considering investing, revealed that the user experience, from onboarding to account funding and withdrawals, is ripe for innovation using open banking capabilities.
The five trends it uncovered were:
Instant withdrawals build trust and deposits: Payments influence customer satisfaction but the ability to make instant withdrawals also drives higher deposits. Almost two thirds (64%) of current and prospective investors are more likely to trust a provider that offers instant payments. While almost half of current investors (46%) said they were likely to switch providers for instant withdrawals. Further, 37% of current investors would also consider depositing more money if they could withdraw instantly.
Slow deposits cost customers money and damage your brand: A quarter of current investors have missed out on an investment opportunity because funds didn’t appear in their accounts quickly enough. This rises to 29% in Italy and 38% in France.
“The ability to fund accounts instantly and securely is critical for our users. TrueLayer enabled us to offer such an experience even for bank deposits. Our users no longer need to do manual wire transfers and wait a day or more before funds arrive in their Trading 212 account,” Nick Saunders, CEO, Trading 212.
Investors are comfortable with instant bank transfer: Despite being a newer payment option which isn’t yet universally available, our research shows that – thanks to compelling simplicity and the trust we already have in our banks – across the continent, consumers are overwhelmingly comfortable with instant bank transfers. 83% of all investors across Europe feel comfortable using instant bank transfers for transactions to their financial services accounts.
Onboarding must be fast and trustworthy: onboarding is the most precarious part of the customer relationship, where a service provider has not built up brand equity, but is asking the most in terms of data and effort from their prospective new customer. Our research shows that during onboarding, the criticality of speed, simplicity and trust are amplified with 61% of investors saying they would not tolerate a signup process lasting more than ten minutes. Over half of our respondents (56%) are likely to quit a signup process if they are directed outside the app to make their initial deposit, suggesting white-labelling any external payment providers is key.
Instant bank verification builds trust: when it comes to onboarding, there is one external provider that a consumer is highly likely to trust: their own bank. Just as customers are suspicious of untrusted third party payment sites, our survey suggests that they are equally positive about platforms which can verify customer credentials directly with their bank. Our research found 70% of respondents would trust a platform that verifies their account directly with their bank.
“In a world where products and services need to be delivered more securely, quickly, and at a lower cost, payment initiation via Open Banking will have a crucial role to play,” eplained Charlie Masters, Product Manager at Nutmeg.
Thanks to open banking, payments now present an opportunity for wealthtech firms to differentiate and drive customer loyalty. Providers that don’t offer instant deposits and withdrawals are missing out on an opportunity to develop a deeper and more positive relationship with their customers.
“The idea of waiting five or more days for a funds transfer is archaic. Customers can now transfer money between their bank accounts with a swipe of an app and increasingly want the same from their savings and investment services providers,” commented George Davis, Product Lead for Payments at TrueLayer.
“We believe that rapid withdrawals will ultimately become the default – because it won’t just be the customer’s expectation, it also makes sound financial sense for service providers. We already see progressive institutions, including our clients at Nutmeg, Freetrade, Stake and Trading212, creating clear water between themselves and competitors through a compelling, open banking-based, customer experience.”
*About the research methodology
YouGov conducted a survey, on behalf of TrueLayer, into online wealth management services (investments, trading and savings) focussed on attitudes to signing up to a service, and the ways in which consumers transfer money into and out of their accounts. We conducted over 3,000 interviews, during October 2020, with data gathered across six European markets: the UK, Germany, France, Spain, Italy and the Nordics (Sweden, Finland and Norway) with a minimum of 500 interviews in each territory.
In order to qualify for our survey, all respondents had to:
currently use or be considering using online platforms for investments, trading and/or saving products
earn a minimum of £30k (or equivalent in European markets)
currently have some financial product or investment asset
Around 1800 of our respondents were current users of wealth management services, while around 1400 were prospective users who are considering using services in the future.