Intention to change in 2022 significantly higher than last year, especially for the affluent masses
JAKARTA, Indonesia, July 19, 2022–(BUSINESS WIRE)–FICO (NYSE:FICO)
63% (more than 3 out of 5) of Indonesian retail banking consumers have experienced a negative impact on their income due to the pandemic
In an uncertain financial climate, the majority of banking consumers in Indonesia will focus on savings (87%) and investment (84%) products.
Nearly one in five affluent Indonesian bank customers will consider switching banks in search of the most competitive banking offers
RFI Global’s 2022 Post-Pandemic Consumer Expectations Report, prepared for FICO, confirmed that the pandemic has worsened financial hardship for retail banking consumers in Indonesia, with more than 3 in 5 experiencing a drop in income. . He also revealed that many are motivated to seek better bank deals and the propensity to switch lenders has increased year on year.
The disruptive effects of the pandemic have varied across the region.
While 23-30% of New Zealand and Australian respondents have experienced a negative impact on their income due to the pandemic, that number has risen to 40% in Singapore and India, 50% in Malaysia and 63% in Indonesia. Respondents in Thailand suffered the hardest hit, with 70% saying their income had been reduced.
The report found that more than one in four consumers in APAC (27%) have postponed their loan repayments, matching 30% of Indonesian respondents. Consumers in some countries were also more likely to do so than others. While almost 1 in 3 (31%) in India and almost half in Thailand (47%) have postponed loan repayments as a result of COVID-19, this was much less common in Singapore (12%), in Australia (9%) and New Zealand. Zealand (7%).
Despite the uncertain financial climate, the majority of Indonesian retail banking customers plan to maintain or increase their investments (84%). Most are looking to maintain or increase their savings (87%), and many will consider switching banking providers this year.
Increase in customers’ intention to switch banking providers
Surprisingly, while the report indicates that most customers were very satisfied with their primary banking providers, up to 20% of APAC banking customers who responded said they planned to switch banks in 2022. In contrast, only 10% said they had changed banks in 2021.
This increased propensity to switch lenders is highest among the affluent masses (defined as the high end of the mass market or those who hold at least IDR 500,000,000 in total investable assets).
In Indonesia, 8% of retail banking customers and 5% of affluent customers changed in 2021. This is expected to more than double this year for the affluent, with 18% saying they are very likely to change, while consumers retail banking have increased. slightly to 9%.
Top reasons cited by Indonesian respondents include feeling that banking with their main bank is inconvenient (39%), a change in personal circumstances (29%), a desire to access better products and services investment and wealth management (24%) and changes in where their pay is deposited (24 percent).
Financial impacts felt by even the wealthiest Indonesians
Among affluent bank customers in Indonesia, 42% experienced a drop in income due to the pandemic, 21% less than in the wider Indonesian retail banking market. Many deferred loan repayments (39%) among the country’s wealthiest were deferred, 9% more than retail banking customers in Indonesia overall.
This income disruption left 25% of affluent Indonesians saying they intended to cut back on spending, as did 45% of Indonesian retail bank customers plan to do so.
Across APAC, the affluent masses are more likely to increase their borrowing relative to the broader market (16% vs. 8%). In Indonesia, the affluent masses are slightly more likely to increase their borrowing than retail banking customers (9 and 5 percent, respectively).
The report further revealed that 91% of Indonesia’s affluent population choose to maintain or increase their levels of investment with banks, which is slightly higher than the country’s overall retail banking market (84%). .
Impacts of the Pandemic on banking intentions
Consumers are changing their banking behaviors, in response to the financial impact of the pandemic.
More than 4 in 5 retail banking customers in Indonesia will increase or maintain their savings (87%), second only in APAC after New Zealand at 94%.
Despite a decline in year-over-year borrowing plans, the level of borrowing by APAC retail banking customers still remains higher than before the pandemic as consumers grapple with the lasting effects of the disturbance.
“The pandemic has clearly exacerbated the financial hardship of customers, regardless of income class,” said Aashish Sharma, senior director of decision management solutions for FICO in Asia Pacific. “As borrowing and spending habits contract, clients will be on the lookout for ways to grow their wealth and increase their savings. Banks must be able to proactively identify customer needs and adapt their approach to alleviate financial concerns while ensuring their products meet customer affordability and funding requirements.”
Gravitation to digital
More than half of Indonesian respondents (54%) still see proximity to branches and ATMs as a determining factor for a primary banking provider; however, the report highlighted the importance of providing digital services. A whopping 72% of APAC retail banking customers chose a fintech product over the option of using their bank’s core services. This figure was highest in Malaysia (94%) and lowest in Australia (39%). Respondents did this because they wanted time and cost savings, ease of use, and simpler application processes.
Comparing 2021 to 2019, APAC consumers are increasingly turning to digital channels at every stage of their application journey: initial inquiries and searches (up 14%), follow-up inquiries (up 15%) and banking applications (up 15%).
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“Banks must understand their customers’ needs at a deeper, more granular level, or risk losing them to competitors and alternative providers,” Sharma said. “Maintaining customer satisfaction will no longer be enough on its own; the customer experience must be radically improved. Customer centricity will be key to consistently delivering hyper-personalized experiences and building customer loyalty.”
This survey was conducted in 2021 by an independent research company adhering to the standards of the research industry. 1033 Indonesian adults were interviewed, as well as 12,885 consumers in Malaysia, New Zealand, Singapore, Australia, India and Thailand.
FICO (NYSE: FICO) powers the decisions that help people and businesses around the world thrive. Founded in 1956, the company pioneers the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 U.S. and foreign patents on technologies that increase profitability, customer satisfaction, and business growth in financial services, manufacturing, telecommunications, healthcare, retail, and many other industries. . With FICO solutions, businesses in more than 120 countries are doing everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of planes and rental cars are in the right place at the right time.
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