Michael Abbott

‘Payments mega trends’ and more from Money 20/20

Research findings presented at this year’s conference may raise some eyebrows.

November 7, 2017

Several leading financial services research and consulting firms use the Money 20/20 podium to unveil their latest industry insights.

Here are a few that particularly registered with me:

Accenture has released the results of its North America Consumer Payments Pulse Survey at Money 20/20 for several years running. This year the consultancy took a more qualitative approach, outlining 10 “payments mega-trends” its data supports.

But it’s the findings beneath the headlines that may raise some eyebrows. In the “kids these days” category, one-third of Generation Z consumers like sharing their payment history on social media, compared to a mere 3% of baby boomers.

While the notion of “open banking” has yet to reach these shores, notwithstanding the Consumer Financial Protection Bureau’s proposed framework, 61% of U.S. consumers like the idea—when explained to them in layman’s terms—of the PSD2 data-sharing approach currently being implemented in the EU.

Left unsaid is whether they’ve thought through the security and consent ramifications.

And although we all know consumer intent does not necessarily align with actual behavior, plans to adopt mobile wallets continue to increase, and nearly half of consumers say they would swap out their primary credit card in pursuit of richer rewards (see Chase Sapphire Preferred and the newly launched Uber card).

Deposit displacement?

Cornerstone Advisors’ Ron Shevlin put forth a compelling hypothesis on how “deposit displacement” is eroding the checking account’s status as the core consumer banking product.

Shevlin points to prepaid cards and PayPal/Venmo accounts taking hold as alternative stores of value, and perhaps more importantly to vehicles like health savings accounts that divert balances before they even make it to direct deposit.

But his message wasn’t all doom and gloom. In proposing hypothetical bundled offers to consumers, Cornerstone found that fee-based checking accounts with appealing value-added services (e.g., cellphone insurance, identity protection) were actually more popular than free checking without similar perks.

The trick is determining which items the consumer values highly enough to pay for.

Random nuggets

Some other random nuggets that found their way into my notebook:

• Uber has surpassed Starbucks as the most frequently occurring business expense merchant.

• Capital One, in piloting its Eno-branded chatbot, found that the third most common consumer input was “thank you.” Who says these devices aren’t gaining acceptance as a human substitute?

• Matt Harris, Bain Capital’s managing director—whose insights across all six Money 20/20 events I’ve found immensely valuable—offered a pair of predictions:

  1. The pendulum is about to swing back from unbundling to rebundling of financial services products.
  2. The notion of FinTech will gradually disappear as its various capabilities become absorbed into our everyday ambient background.

Consumers’ emotional connection to money

Finally, during an interesting keynote, Cognizant shared its findings on consumers’ emotional connection to money. Its study segmented spending and investment into eight categories of “fast” and “slow” money—reminding me of a granular take on the current Voya Financial campaign.

The fast categories are largely transactional in nature and fairly straightforward. It’s the slow money that seems to create consternation—lacking instant gratification or a clear feedback loop, it tends to leave consumers feeling stressed and ill-informed, sometimes causing them to avoid the task altogether.

Not only is this an opportunity to provide value add, it’s likely a higher-margin area.

According to Cognizant’s research, 75% of consumers with a $1 million windfall would look for advice somewhere other than banks, which they see as “product pushers.”

Sounds like a credit union opportunity to me.

GLEN SARVADY is managing partner at 154 Advisors and senior payments expert with Best Innovation Group, a CUNA consulting partner. Follow him on Twitter via @154Advisors. His views do not necessarily reflect those of Credit Union National Association.