Four innovative digital features consumers are willing to switch banks for

Thursday, June 8, 2023

Issuer, Merchant

Consumers now expect ultra-fast, easy and seamless digital experiences for everything from ordering coffee to booking a flight—and on any device, anywhere. So it’s not surprising that over one-third of consumers today use their digital banking channels daily to check their balances, initiate payments, apply for loans and handle other interactions with their banks.

What this means is that in the evolving digital banking landscape, banks that want to win—and keep—customers must innovate and offer the features and tools consumers want most.

A recent Aite-Novarica report, “Will Banking Apps Be the New Super Apps?,” commissioned by Ethoca, found that 50% of consumers surveyed are ready to switch banks to get the features they want. A new Digital Field Guide from Ethoca delves further into the research and looks more closely at those digital banking features consumers say they’d value most.

Providing a better all-around customer experience

What’s clear based on the research is that consumers want their digital banking apps to provide an easy user experience offering both convenience and transparency. Four features that consumers said they’d be most eager to switch banks for include digital receipts, subscription management, order management and merchant refund requests. Download the full Digital Field Guide to see all the features.

Merchants, consumers and financial institutions all benefit when digital banking channels roll out engaging new features: Issuers can show they understand what modern consumers want while deepening their cardholder relationships; merchants can engender more loyalty among their customers while reducing chargebacks; and consumers can better manage their purchases—including gaining more visibility into their purchases and finding better deals and promotions.

And there’s real pressure for payment stakeholders to create more engaging digital experiences: Half of consumers will switch banks when another is providing the features they want.

The digital banking features consumers want

Here’s a closer look at the top four key digital banking features consumers surveyed by Aite-Novarica said they want:

Digital receipts

Digital receipts are electronic receipts that can complement paper receipts to provide a more convenient way to keep track of purchases. Merchants have traditionally provided digital receipts by collecting the customer’s email or mobile number at checkout and then sending them via email, text or their mobile app. And 68% of consumers said they’ve provided their email or phone number to receive one.

However, consumers surveyed said they’d like to receive receipts directly through their digital banking channel—so they don’t have to go searching through their inbox or text messages.

Issuers and merchants also benefit from offering digital receipts through banking apps: They can further engage their customers, while also preventing chargebacks—as digital receipts can jog customers’ memory purchases before they dispute them due to transaction confusion.

Subscription management

Subscription-based products and services, including everything from online streaming services to home-delivered meal kits, have experienced exponential growth in recent years. Research shows that consumers crave a way to track and manage all their subscriptions in one convenient place. In fact, 85% of those surveyed said they’d be interested in managing them through their online or mobile banking applications.

A subscription management feature lets consumers manage their subscriptions directly through their digital banking channels and helps re-route some of the disputes and chargebacks related to subscription-based payments. It also can create a stronger connection between consumers and merchants by facilitating more direct interaction.

Order management

Consumers now frequently shop online from many different merchants and can have difficulty keep track of all of their order statuses. Such confusion sometimes leads to cases of first-party fraud, when customers dispute legitimate transactions because of service-related issues.

For example, a customer might dispute a payment related to an online order because they haven’t received it—even though that shipment wasn’t scheduled to arrive yet.

An order management feature could allow customers to track the status of their orders, including providing an estimated delivery date and notification of package drop-off.

Such a feature can prevent chargebacks related to first-party fraud by greatly reducing the risk that customers will dispute purchases they haven’t yet received, under the assumption that they were lost. The majority of consumers—64%—expressed interest in being able to check shipping status directly through digital banking channels.

Request for refunds

Consumers increasingly dispute charges (initiating the costly chargeback process) with their card issuer when they simply want a merchant refund—whether because of service-related issues or when a household member other than the authorized cardholder made the purchase, such as a child buying a movie over a smart device.

Given how common of an issue this is, about 50% of survey respondents expressed interest in a “request a refund” feature allowing them to ask the merchant for a refund through their digital banking channels. Such a feature would make such requests convenient for consumers while also reducing chargebacks by greatly decreasing the number of disputes made through issuers.

For merchants, this would be an easier, more direct and less expensive way to deal with customer refund requests instead of handling them through the chargeback process. It could be as simple as a merchant embedding a link on their digital receipt that directs customers to their support channels— including an option to request a refund.