4 charts, The Customer Effect

Financial services subscriptions are coming, in 4 charts

  • Many products and services have been reframed as subscriptions.
  • A set of EY researchers believes that too will happen in financial services.
close

Email a Friend

Financial services subscriptions are coming, in 4 charts

Everything is being offered as a subscription. From cars to music libraries, we’re moving away from a culture of ownership. While payments underpin the general move to subscriptions, there hasn’t been a lot of activity around financial services moving to a subscription model. That’s changing.

In a new report from EY that surveyed 1,500 US consumers split across wealth, age and other demographic factors, researchers set out to describe what the financial services industry would look like five years from now in light of evolving consumer needs and expectations.

People say they’re financially healthy but they’re not

Top 10 factors shaping consumer perceptions of financial health

American consumers are notoriously overly optimistic when it comes to describing their financial health. 83 percent of people surveyed by EY rated themselves as financially healthy. The data shows otherwise. People want to improve their financial health, but their behavior is complacent.

These beliefs, coupled with the fact that people routinely come up short when it comes to saving for retirement or having sufficient rainy day funds, demonstrate how the general public isn’t getting the best out of today’s version of financial services.

The personal finance OS

A personal financial OS: the platform for financial wellness

The researchers floated the idea of a personal financial health operating system by the people they surveyed. The idea was to take the collective temperature of an AI-driven platform that helps to proactively manage the daily and long term financial decisions of our lives. Gamification of the experience would lead to changes of behavior.

Like Credit Karma’s credit score, the personal finance OS would use a numeric value for financial health that would fluctuate in real time based on cashflow and financial preparedness. At the core of the platform would be AI-driven advice that contextualizes suggestions, nudges and recommendations.

EY ran some scenario analysis around this idea, tapping in to see how people would respond if different types of financial institutions offered this financial OS. Banks fared well, seeing a lift in demand of 14.4 percent in the 18-34 segment.

Consumer finance will become the next subscription model

Financial services as subscription

The researchers reasoned that financial services could be delivered via a subscription, just like so many other products.

“The model would involve an annual fee and include a bundle of products and services associated with specific life events, as well as a financial health monitor,” the authors wrote.

“As part of the subscription, consumers would be provided with pre-curated access and potential concierge services related to other professional services, like accountants and attorneys, and nonfinancial needs, like nursing facilities and day care. All bundles would be based on the context of specific life events and consumer interest in associated services.”

The 25–34 (52 percent) and 35–49 (51 percent) age groups expressed the highest interest in subscription models, followed closely by the 18–24 age group (44%). The appeal of subscriptions appears to be more age-based than wealth-based.

Life events call for life subscription financial services bundles

Life event subscription bundles

Instead of flat or AUM fees, in the future, consumer financial services may be delivered as bundled packages around life events.

Several life events prompt high interest in subscription-based models. Getting married (96 percent), having a child (90 percent), starting a first job (83 percent) and preparing to send a child to college (76 percent) were the top events to elicit interest in financial services subscription bundles.

What’s more, researchers wanted to know people’s receptivity to subscribing to these bundles through their primary financial institution versus receiving them from a technology firm. In every demographic and across all types of financial institutions, people would prefer to subscribe to an FI’s subscription bundle.

0 comments on “Financial services subscriptions are coming, in 4 charts”

The Customer Effect

It’s 2022 and FIs are still struggling to make their products accessible. Procure Access wants to change that.

  • Americans with disabilities have a total of $490 billion in disposable income. Yet financial services are struggling to meet accessibility requirements, even with basic tools like PDFs.
  • With Procure Access, everyone from Google to Fidelity Investments is getting involved to ensure accessibility is considered at the start of the procurement process.
Rabab Ahsan | September 14, 2022
Sponsored, The Customer Effect

Creating a hyper-personalized banking experience

  • To this day, a lot of financial institutions are using legacy systems that were written back in the '80s and remain the same.
  • Today's digital banking platforms and card services can offer hyper-personalized experiences to create a unique experience for each cardholder.
Zeta | August 25, 2022
The Customer Effect

The reversal of Roe v. Wade: Its impact on economic growth, financial wellbeing, and the financial services industry

  • Roe v. Wade has been overturned, after almost half a century -- what does that mean financially for America?
  • Here's how the ruling may hurt the state economies that will have a ripple effect throughout the economic system of the country.
Sara Khairi | August 02, 2022
Sponsored, The Customer Effect

Finance with a face: How personalization drives engagement, retention, and profitability

  • New technology allows for innovative companies to build banking products that cater to the specific needs of each individual.
  • Personalization is the key to meeting key product metrics and competing in this new landscape of embedded finance.
Q2 | March 14, 2022
Library, Modern Marketing, The Customer Effect

Tearsheet’s 2021 guide for marketers: Gens under the lens

  • We closed off last year with a thorough breakdown of the financial consumer profile of each of the generations.
  • The compiled guide for marketers is now available for download.
Tearsheet Editors | January 24, 2022
More Articles