Navigating Consumer Choice: Becoming the Main Financial Institution

I find it fascinating to work in consumer insights in this fast-changing environment. When I conducted tracking studies years ago, the data and brand pool stayed the same year after year, making it challenging to find insights. Honestly, it was a bit boring. Nowadays, the markets are more complex, and in my opinion, market research projects have become much more interesting. Tracking studies need to be continually updated with new players, and we swim in an ocean of new data.

As new brands emerge, consumers have more options, and financial institutions face the challenge of maintaining their top-of-wallet status, especially in the most disrupted markets where more options are available. Take Brazil, for example, where consumers are aware of 22 brands and are clients of 5 on average. So, what can institutions do to be the preferred choice?
 

How our study was born

Visa’s recent study on consumer preferences in the financial sector provides an in-depth look at the factors driving consumer choice of financial institutions. The study was designed not only to identify which institutions consumers are aware of, own, and prefer, but more importantly, to uncover the key drivers that make one institution the primary financial choice.

At a regional level, the study reveals that 65% of consumers consider a traditional bank as their main financial institution, while 35% favor FinTechs. However, these figures vary significantly by country. For instance, in Argentina, 59% of consumers report having a FinTech as their main institution, whereas in Chile, this figure drops to just 7% and traditional banks lead in the market.

A particularly intriguing finding is the gap between principality (being the main institution) and preference. FinTechs display a higher preference (46%) compared to their principality (35%). This suggests that FinTechs have the potential to increase their market share if they expand their product offerings. Conversely, traditional banks show a higher principality but lower preference, indicating a potential risk of losing market share.

The study identifies three primary drivers of principality: digital experience, security, and offering a holistic solution. These factors are consistently important across various consumer segments, including mass consumers, affluent individuals, Gen Z, Millennials, and older generations, as well as across different product ownership categories. Understanding how each institution is perceived in relation to these drivers offers actionable insights for financial institutions aiming to enhance their status as the primary choice for consumers.

To learn more about our Principality study, the nuances by country, the differences between traditional banks and FinTechs and the full list of top 10 drivers impacting principality, Click here to read our paper on “How Customers Select Their Preferred Financial Institution.”

Source: Visa Principality Study commissioned to The Harris Poll, including 11,000+ online interviews in 7 countries in Latin-America.