The rapid evolution of FinTech solutions continues to reshape
consumer perceptions of banking, with stored value accounts (SVAs)
emerging as a potential competitor to traditional banking accounts
and cards. Auriemma Group's latest issue of The Payments Reports
uncovers positive sentiments around SVAs, underscoring their role
in the financial ecosystem and raising questions about their
long-term viability as a banking alternative.
NEW
YORK, Nov. 26, 2024 /PRNewswire-PRWeb/ -- The
rapid evolution of FinTech solutions continues to reshape
consumer perceptions of banking, with stored value accounts (SVAs)
emerging as a potential competitor to traditional banking accounts
and cards. Auriemma Group's latest issue of The Payments Reports
uncovers positive sentiments around SVAs, underscoring their role
in the financial ecosystem and raising questions about their
long-term viability as a banking alternative.
While stored value accounts offer benefits
like lower fees and faster transactions, traditional banks deliver
stability, security, and trust—advantages that consumers continue
to value.
SVAs offered by providers like PayPal and Venmo allow consumers
to preload or receive funds and use them for a variety of
transactions. Auriemma's research shows that 61% of debit
cardholders view SVAs as at least complementary to traditional
banking, while 31% believe these accounts could replace at least
some banking functions. Notably, 8% feel SVAs could entirely
replace traditional banking services.
"Stored value accounts represent an important evolution in
financial tools, but the collapse of Synapse underscores the risks
of fintech intermediaries not covered by the FDIC," says
Jonathan O'Connor, Senior Manager of
Research at Auriemma Group. "While stored value accounts offer
benefits like lower fees and faster transactions, traditional banks
deliver stability, security, and trust—advantages that consumers
continue to value."
What Can Traditional Banks Do?
SVAs are causing a modest stir among cardholders. Less than
three-in-ten say they would be likely to use the option if offered
by a FinTech provider. However, as SVAs grow in popularity,
traditional banks can differentiate themselves by doubling down on
their strengths and addressing evolving consumer needs. Auriemma's
research highlights several strategies banks can use to endear
themselves to current and potential customers:
- Building Trust: Traditional banks should emphasize their strong
track record of security—including FDIC backing—and
fraud prevention. Providing clear, transparent
policies and educating customers about safeguards can build trust
that SVAs may not yet fully inspire.
- Enhanced Digital Experiences: Streamlining mobile and online
banking interfaces can help banks compete with the tech-first
approach of FinTechs. User-friendly apps with integrated budgeting
tools, instant payments, and easy account management could make a
significant difference.
- Personalized Financial Products: Banks can leverage their broad
customer data to offer tailored financial products, such as
personalized savings plans or rewards programs that align with
individual spending habits.
- Bundled Offerings: By packaging SVAs with more traditional
banking services—like high-yield savings accounts, credit cards,
and loans—banks can create holistic financial solutions that
FinTechs may struggle to match.
Opportunities for Growth
Most of those who have used a SVA with a FinTech provider say
they would likely use more of that provider's products, if
available. This highlights the possibility of expansion SVAs create
for those who use them. While largely benefiting FinTechs hoping to
expand into other financial services, SVAs could also be a gateway
for traditional banks hoping to deepen their relationship with new
and existing customers.
"Traditional banks have the advantage of deep customer
relationships, established financial stability, and the trust that
comes with rigorous regulatory oversight. By leaning into these
strengths and innovating alongside FinTechs, banks can remain
central to their customers' financial lives," says O'Connor.
"Our research shows that the future of banking will likely blend
the reliability of traditional institutions with the agility and
accessibility of modern FinTech solutions, creating a dynamic
ecosystem that meets a diverse set of consumer needs."
Media Contact
Jonathan O'Connor, Auriemma
Group, 1-646-437-6116, jonathan.oconnor@acg.net,
www.auriemma.group
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SOURCE Auriemma Group
