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2017 PACE REPORT

The 2017 PACE Report provides meaningful, actionable insights for becoming and remaining your customers' first choice in financial institutions.

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  • U.S. Consumer
  • U.S. Small-Midsize Business
  • U.S. Community Consumer
  • United Kingdom
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  • Global
  • Australia (Coming Soon)
  • Brazil (Coming Soon)
  • Thailand (Coming Soon)
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Country Reports

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Each report reflects country-specific research to provide better insight into what local consumers want. Choose your country of interest:
Global

  • USAUnited States
  • UKUnited Kingdom
  • IndiaIndia
  • GermanyGermany
  • CanadaCanada
  • AustraliaAustralia
  • ThailandThailand
  • BrazilBrazil

USA

For the US market, we have created three meaningful, actionable reports for becoming and remaining the first choice for your customers' financial services. Please select the relevant report below.

  • USAUnited States
  • USASmall-Midsize Business
  • USACommunity Banks

Top of phone

Mobile payment options are essential to attracting and retaining millennials.

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Digital is already the primary way consumers connect with their bank.

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Approximately 70% of all consumer interactions with their bank are done digitally, via online or mobile banking options. Young millennials, specifically, are far more likely to use a mobile app to initiate contact or a transaction.

U.S Consumer - Top of Phone Chart 1

The importance of providing digital payment options has risen year over year in all age segments.

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U.S consumer - Top of Phone Chart 2

Providing digital payments options, including mobile wallets and P2P options, may not yet be table stakes beyond millennials, but with expectations rising among Gen Xers and baby boomers, not offering them will soon not be an option.

Consumers are ambivalent about using their banks app to make digital payments.

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Millennials and consumers in general are indifferent as to whether they use their banks mobile app or a third-party app to make P2P payments. P2P supports mobile payment habituation, so retaining top of phone status will be critical as consumers shift more of their payments from plastic to digital.

U.S consumer - Top of Phone Chart 3

Life Events

Where banking meets life.

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Opportunities abound for financial institutions to help consumers plan and save for life events and realize their financial aspirations. To succeed, banks need to ensure they are there for the customers at exactly the right time.

The primary bank is the first choice of customers when they want financial assistance.

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Across the board, when asked where they would turn for financial assistance for a key life event, U.S. customers overwhelmingly cited their primary banking provider as their first choice for assistance when buying a home, starting a business, or tackling other key life events.

U.S consumer Life Events Chart 1

But competitors step in and capture customers before they contact their primary bank.

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U.S consumer Life Events Chart 2

Customers' first-choice intentions are rarely realized, as competitors step in to capture these customers often before they have contacted their primary bank. This can be seen in the low percentage of key accounts held by the primary bank.

Banks can grow by reaching out to customers likely to experience key life events.

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Banks need to better coordinate outreach and align marketing with the likelihood of key events in customers lives. Nearly two thirds of senior millennials and half of Gen X have at least one major event planned within the next two to three years. The key to driving such touchpoints is in-depth, targeted analysis of the demographic, transactional and socioeconomic data within the banks own systems.

U.S consumer Life Events Chart 3

Digital Is Not Optional

Banks can no longer ignore or delay the digital revolution.

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Today’s bank customers expect to be able to access their accounts any time, from anywhere, and send and receive money with a few clicks or taps. These are no longer nice to have features.

Digital is already the primary way customers connect with their bank.

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Approximately 70% of all customer interactions with their bank are done digitally, via online or mobile banking options. Digital banking is the foundation of the modern customer relationship.

U.S consumer Digital Payments Chart 1

Millennials are clearly driving mobile progression.

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US Customer Digital Payments Chart 2

Mobile progression is clear among the younger generations, especially young millennials. A user-friendly, multi-featured mobile banking app has become table stakes for attracting and retaining millennials (and will continue to be so as they mature).

Top 50 Global Banks are currently winning the battle for the digital natives.

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The top 50 global banks have been first to market with new digital banking solutions and products. For that, they're winning over more of the coveted millennial segment, but there are signs of attrition as customer age. To win over these customers, smaller banks must offer the digital products and services they've come to expect.

U.S consumer Digital Payments Chart 3

Retail Payments

Loyalty as a currency.

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Not being recognized and rewarded for their business is a common complaint among customers. However, digging into the PACE data, it's clear that banks have an opportunity to improve in this area through strategic use of credit card rewards programs.

Credit cards are still the preferred way to pay for common purchases.

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It's critical for banking provider's credit cards to remain top of wallet, especially with younger millennials. More than 40% of customers would use their credit card to cover a large irregular expense, which would generate interest income for banks.

U.S.A Customer - Retail Payments Chart 1

Credit cards add value to the banking relationship.

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U.S.A consumer - Retail Payments Chart 2

According to PACE data, gaps for Rewards and Aspirations decline significantly among the credit card holders who have a card with their primary financial institution. Banks may be able to improve perceptions among their customers through via their credit card loyalty programs.

Primary banking providers are challenged to attract credit card holders business.

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The challenge for banks is improving penetration with their existing customer bases. Currently, only 41% of customers hold a card with their primary banking provider – and just 19% exclusively use their primary banks card.

U.S.A Customer - Retail Payments Chart 3

Gen MX

There is evidence of a powerful new segment of banking customers emerging.

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Senior millennials (26-35) and Gen Xers (36-51) practice similar banking habits that span the generational divide as well as experience similar life events at a greater frequency.

Gen Xers and senior millennials have similar earning and spending habits.

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Gen MX customers are accumulating goods and beginning to accumulate wealth with an average income of $72,200. They represent top targets for credit cards and loans as well as products to help them save for the future and build wealth.

U.S.A Customer - Gen MX Chart 1

Gen MX also practices very similar banking habits.

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U.S.A Customer - Gen MX Chart 2

Both Gen Xers and senior millennials prefer digital banking, but do not yet have the mobile first preferences of their younger counterparts. Both segments bank most frequently online followed by mobile, and visiting a branch is their least-common practice.

Their collective preference for digital payments continues to increase.

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Providing digital payments options, including mobile wallets and P2P options, may not yet be table stakes beyond millennials but Gen Xers 2017 importance score is equal to that of last years senior millennials.

U.S.A Customer - Gen MX Chart 3

Digital Bridge

Consumers' banking practices are heavily influencing the SMB market.

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Small and mid-sized businesses (SMBs) want to bank the way their customers do — digitally. However, they're also eager to stay ahead of their customers and are much quicker to adopt new digital offerings.

Together, Senior millennials and Gen Xers are the prime target for SMB banking.

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Collectively, Gen MX (senior millennials + GEN X) customers earn just over $72,200 annually. They're not only the prime target audience for most SMBs, they're also most commonly SMB owners or proprietors.

U.S.A SMB- Digital Bridge Chart 1

SMB adoption of mobile P2P payments is outpacing the customer market.

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U.S.A SMB- Digital Bridge Chart 2

Providing digital payments options, including mobile wallets and P2P options, may not yet be table stakes beyond millennials, but with expectations rising among Gen Xers and baby boomers, not offering them will soon not be an option.

2/3 of SMB digital interactions with a bank are done on mobile devices.

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For SMB banking, mobile penetration is similar across different revenue segments but highest among younger businesses. Penetration is so high, in fact, that mobile banking can be considered as table stakes in serving them.

U.S.A SMB- Digital Bridge Chart 3

Attract & Retain

Small-Midsize Businesses want to bank digitally, and they're willing to change banks to do it.

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Small-midsized businesses are switching banks with increasing frequency. The opportunity for banks is to attract defectors and retain the SMB customers they have.

Switching banking providers is now commonplace for SMBs.

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Who's switching the most Young businesses. In fact, according to 2017 PACE data, startups were 17.5 times more likely to switch banks than established businesses, highlighting an opportunity for banks to grow their business with this segment.

U.S.A SMB- Attract and retain - Chart 1

Nearly half of business switching banks cited lack of needed product or services.

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U.S.A SMB- Attract and retain - Chart 2

Competitive pricing is the top reason SMB customers switched banks. Also of note, product or service offer lacking was cited by nearly half of SMBs as a key incentive for making a change.

Referrals may be the best option for winning over SMB customers.

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When it comes to winning over new SMB customers, PACE data suggests the current SMB customers may be the best weapon for banks. That's because 29% of SMBs switched banks because of a referral or recommendation from another business.

U.S.A SMB- Attract and retain - Chart 3

Top of Phone

Digital payments are very important to SMBs, their customers and their vendors.

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Top of phone is now top of mind not only with U.S. Customers but also small and mid-sized businesses, which have quickly adopted mobile banking and person-to-person (P2P) payment apps.

SMB adoption of mobile P2P payments is outpacing the customer market.

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U.S.A SMB- Top of Phone - Chart 1

Person-to-person (P2P) payments are very important to SMBs, which regularly use these apps to pay vendors and suppliers. However, a shocking number of SMBs use non-bank financial apps to pay vendors and suppliers, suggesting an unmet need with their primary banks mobile apps.

B2C is a key driver of mobile payments.

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PACE data shows that businesses serving customer (B2C) markets are more likely than companies in the business-to-business (B2B) market to accept cash, credit cards, money orders and P2P payments. Businesses that serve B2B markets solely are more likely to accept business checks, online payments and wire transfers. Mobile payments are gaining the most acceptance among businesses serving both the B2C and B2B markets.

U.S.A SMB- Top of Phone - Chart 2

Mobile is an urgent pain point for smaller banks targeting SMBs.

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Mobile banking has gone mainstream, but community banks lag badly in penetrating their customers bases with mobile banking apps. What's more, all banks must strive to provide business customers with mobile banking apps that enable a wide range of transactions.

U.S.A SMB- Top of Phone - Chart 3

Digital Is Not Optional

SMBs want to bank like their customers do digitally.

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Like the customers they serve, small and mid-sized businesses are increasingly dependent on accessing banking services at any time, from anywhere. This is especially true for startups and young enterprises.

2/3 of SMB interactions with their banks are done digitally.

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Like the customers they serve, small and mid-sized businesses prefer to bank digitally. Across all business revenue segments, 68% of SMB customers banking interactions are online or mobile.

U.S.A SMB- Digital Payments - Chart 1

Younger businesses are more likely to use mobile banking.

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U.S.A SMB- Digital Payments - Chart 2

For SMB banking, mobile penetration is similar across different revenue segments but highest among younger businesses. Penetration is so high, in fact, that mobile banking can be considered as table stakes in serving them.

To get the digital solutions they want, SMBs are turning to the big banks for now.

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For most SMBs, accessing the digital banking solutions they want has meant sticking with larger banks that can quickly buy or build services to meet those needs. However, just like their customers, SMBs are not thrilled about the pricing and fees big banks charge for what they see as basic services.

U.S.A SMB- Digital Payments - Chart 2

Top of Phone

Community banks need to battle for position on the home screen.

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In today's digital world, top of phone is fast becoming top of mind for U.S. customers, especially millennials but even for Gen Xers and baby boomers. This can be seen in shifting customer viewpoints around the importance of having digital payment options.

Use of mobile banking continues to increase among younger customers.

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Though still lagging behind online banking overall in usage, mobile is fast becoming the primary way millennials contact a community bank. Its usage is also increasing among Generation X and baby boomers, though not as quickly.

U.S.A Community Customer - Top of Phone - Chart 1

Digital payments increased in importance for all customers but especially for young millennials.

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U.S.A Community Customer - Top of Phone - Chart 2

Digital payments continue to rise in importance, especially with younger customers, a segment community banks are struggling to win over. Currently, 57% of community bank customers are over the age of 51.

Community bank customers are less likely to make mobile transactions.

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When looking at usage rates of the primary banks mobile app for transactions and payments, community banks customers are less likely to make mobile transactions or payments.

U.S.A Community Customer - Top of Phone - Chart 3

Digital Is Not Optional

Community banks can no longer ignore or delay the digital revolution.

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Customers of community banks are generally older but they still increasingly expect to access banking services at any time, from anywhere. Not fully recognizing the importance of digital (especially mobile) in attracting new, younger customers may hurt community banks going forward.

Most customer interactions with community banks are now done digitally.

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Right now, about 72% of all customer interactions with a community bank are done digitally, via online or mobile banking channels. This cuts across all customer segments, from millennials to baby boomers, and makes it clear that digital banking is the foundation of the modern customer relationship.

U.S.A Community Customer - Digtial Payments - Chart 1

Mobile adoption is accelerating, but coming from a slower start at community banks.

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U.S.A Community Customer - Digtial Payments - Chart 2

Growth in mobile transactions and payments year over year shows mobile adoption is accelerating, but coming from a slower start at community banks. Mobile adoption is being driven by millennials, especially young millennials, who are far more likely to use a community banks mobile app and make purchases with it.

But millennials are the smallest group of community bank customers.

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While millennials may be the biggest driver of digital banking, they're the smallest customer segment for community banks. This speaks to the overall problem of community banks being slow to react to the needs and desires of the next generation of banking customers. They can no longer ignore or delay the digital revolution.

U.S.A Community Customer - Digtial Payments - Chart 3

Retail Payments

Loyalty is a currency.

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Community banks have many challenges and opportunities in terms of their credit card programs, including the ability to win over more customers and use their loyalty programs to improve overall satisfaction.

Credit cards are still the preferred way to pay for common purchases.

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It's critical for community banks' credit cards to remain top of wallet, especially with younger millennials. More than 40% of customers would use their credit card to cover a large irregular expense.

U.S.A Community Customer - Retail Payments- Chart 1

However, community banks lag badly behind in credit card penetration of their customer bases.

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U.S.A Community Customer - Retail Payments- Chart 2

Community banks are losing their customers credit card business to competitors. Worse, half of community bank customers don't have credit cards at all. The magnitude of the problem can be seen in that only 17% of community banks customers hold a credit card from the primary bank — less than half of the U.S. average of 38% for all banking providers.

Ushering customers in credit card loyalty programs may improve satisfaction.

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Credit cards also represent a vehicle for helping customers achieve their financial goals. Community banks still fall short of customers expectations, but customers who only use their primary banking providers credit card are more likely to rate their community bank favorably in helping them achieve their aspirations and gain control over their finances.

U.S.A Community Customer - Retail Payments- Chart 3

Life Events

Where banking meets life.

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There is great opportunity for banks to improve their service relationships with customers. This is especially true when it comes to helping customers find, evaluate and select financing and investment products related to key life events.

The primary bank is the first choice of customers seeking financial assistance.

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Across the board, when asked where they would turn for financial assistance for a key life event, U.S. customers overwhelmingly cited their primary banking provider as their first choice.

U.S.A Community Customer - Life Events- Chart 1

Community banks are losing customers before they can make contact.

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U.S.A Community Customer - Life Events- Chart 2

Unfortunately, first-choice intentions are rarely realized, as competitors move in to capture those customers often before they have contacted their community bank. This can be seen in the low percentage of key accounts held by the customers primary bank.

Opportunities for growth center around tying banking solutions to key life events.

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Community banks need to better coordinate outreach and align their marketing with the likelihood of key events in consumers lives. The key to driving such touchpoints is in-depth, targeted analysis of the demographic, transactional and socioeconomic data within the banks' own systems.

U.S.A Community Customer - Life Events- Chart 3

Top of Phone

P2P is essential to becoming top of phone.

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Providing digital payments options, including mobile wallets and P2P options, may not yet be table stakes beyond millennials in some countries but it will be soon.

The importance of digital payments has increased significantly.

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Globally, the PACE survey found that digital payments increased in importance to number 8 overall as its score increased by 8 points.

Global -Top of Phone - Chart 1

The importance of providing digital payment options has risen year over year in all age segments.

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Global -Top of Phone - Chart 2

When looked at by age group, digital payments increased in importance for all segments globally with a dramatic jump for baby boomers, who are catching up fast and following the example of their younger counterparts.

Customers are ambivalent about using their banks app to make digital payments.

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Millennials and customers in general are indifferent as to whether they use their banks mobile app or a third-party app to make P2P payments. P2P supports mobile payment habituation, so retaining top of phone status will be critical as customers shift more of their payments from plastic to digital.

Global -Top of Phone - Chart 3

Digital Is Not Optional

Banks everywhere must acknowledge and participate in the global digital revolution.

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Today's bank customers expect to be able to access their accounts any time, from anywhere, and send and receive money with a few clicks or taps. These are no longer nice to have features.

Digital is already the primary way customers connect with their banks.

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Globally, as many as 7 out of 10 customers reported contacting their banking via mobile phone in the past 30 days. Generally, this was for routine tasks like checking an account balance, but 59% reported paying at least one bill via this channel.

Global -Digital Payments - Chart 1

Millennials are clearly driving digital payments.

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Global -Digital Payments - Chart 2

Mobile payments have gained the most traction among young millennials, with senior millennial rates catching up. Online shopping and paying utility bills are the most common uses globally. Online contacts with banks will continue to shift to mobile as anywhere, anytime access gains importance.

P2P apps are becoming commonplace – and are used in tandem with banks apps.

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Globally, digital payments are becoming much more ubiquitous, with the majority of millennials using a mobile app to pay someone. However, it should be noted that customers are not tied to their primary banks mobile app and report using outside P2P apps at a similar frequency.

Global -Digital Payments - Chart 3

Driving Connectivity

The digital natives are changing the way the world banks.

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Millennials overwhelmingly favor digital bank channels for carrying out their transactions. This behavior is not only influencing how older generations bank but also how their primary banks interact with them as well.

Millennials are pulling other generations onto the digital banking bandwagon.

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Digital payments increased in importance for all segments globally in 2017 but most notably from baby boomers who are catching on fast to how their younger counterparts prefer to bank.

Global - Driving Connectivity - Chart 1

Millennials are not shy about turning to outside P2P apps to make payments.

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Global - Driving Connectivity - Chart 2

Customers and millennials especially are indifferent as to whether they use their banks mobile app or a third-party app to make P2P payments. While millennials are far and away the power users of digital payments, both Gen X and the baby boomers are equally likely to look beyond their primary banks app.

Younger customers want payments that can be made instantaneously.

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The most likely reason that millennials are using third-party P2P apps like Venmo is because the payments are instantaneous. In fact, 33% of young millennials and 24% of senior millennials cite the inability to make instant payments as a problem.

Global - Driving Connectivity - Chart 3

Life Events

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Where banking meets life.

Opportunities abound for financial institutions everywhere to grow by better positioning themselves as advisor and customers, helping them plan and save for life events and realize their financial aspirations.

Millennials and Gen Xers expect needing financial assistance in the near future.

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Banking providers need to understand customers aren't just looking for a loan or brokerage account. They are looking to fulfill their aspirations around planned life events. More than four out of five (83%) senior millennials and three quarters of Generation X have at least one major event planned within the next two to three years.

Global - Life Events - Chart 1

But customers, especially millennials, have a hard time finding key information and services quickly.

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Global - Life Events - Chart 2

PACE data shows that younger customers have had the most difficulty engaging with their primary banks when seeking assistance or help with obtaining a new financial product. In fact, 39% of young millennials report having difficulty getting all the information they need to make an informed decision without visiting a branch.

One potential solution is to offer feature-rich, personal-financial management apps.

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Many customers want a more advisory and less transactional relationship. Yet less than one third of customers have financial advisors. In general, perceived affordability and having too few assets to warrant a financial advisor are barriers to providing financial advice. But these drawbacks could be mitigated with personal financial management apps that include features such as online chat, educational forums, and interactive tools.

Global - Life Events - Chart 3

Digital Is Not Optional

Banks can no longer ignore or delay the digital revolution.

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Driven by shifts in social demographics, coupled with the rise of Fintech and challenger banks, UK customers expect to access banking services any time, from anywhere.

Digital is already the primary way customers connect with their bank.

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About 75% of contacts that UK customers have with their banking providers are digital. Mobile has surpassed online contact among young and senior millennials and is gaining traction with older generations. Because mobile is a key contact method for millennials, UK banks should seek to create relevant mobile messaging strategies to truly connect with this coveted customer segment.

UK - Digital Payments - Chart 1

Millennials, especially young millennials, are driving mobile adoption.

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UK - Digital Payments - Chart 2

Mobile progression is clear among the younger generations, especially young millennials, who are the most frequent users of digital payments and other mobile banking options. A user-friendly, multi-featured mobile banking app has become table stakes for attracting and retaining these key customer demographic.

High Street banks are currently winning the battle for the digital natives.

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The major banks have been first to market with new digital banking solutions and products. For that, they're winning over more of the coveted millennial segments, but there are signs of attrition as customers age. Challenger banks, while not gaining serious traction yet, are also a key driver of digital banking in the UK.

UK - Digital Payments - Chart 3

Top of phone

Mobile payment options are essential to attracting and retaining millennials.

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In today's digital world, top of phone is fast replacing top of wallet for UK customers, especially millennials but also for Gen Xers and baby boomers. This can be seen in the increasing importance of digital payments.

The importance of providing digital payment options has risen year over year in all age segments.

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Providing digital payments options – including mobile wallets, P2P payments and contactless transactions – may not yet be table stakes beyond millennials, but, with expectations rising among Gen Xers and even Baby Boomers, not offering them will soon not be an option.

UK - Top of Phone - Chart 1

Millennials are early adopters of digital payments.

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UK - Top of Phone - Chart 2

Unsurprisingly, millennials – especially young millennials – are the drivers of digital payment adoption in the UK. They most often use digital payments to pay their utilities and other bills but are also using digital payment options to pay other people directly.

UK banks need to solidify their position as the first choice for P2P payments.

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Currently, UK customers are more likely to use their financial institutions mobile app for P2P payments, which is different from what's seen in the U.S. and other countries. P2P supports mobile payment habituation, so retaining top of phone status will be critical for UK banks as customers shift more of their payments from plastic to digital.

UK - Top of Phone - Chart 3

Life Events

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Where banking meets life.

Opportunities abound for UK banks to grow by better positioning themselves as advisor and their customers, helping them plan and save for life events and realize their financial aspirations.

Collectively, Gen Xers and senior millennials are high-income, highly active banking customers.

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Both senior millennials and Gen Xers are nearing the height of their earning potential, making more than $33,000 annually. Due to their age ranges (26-51), they're also at the time of their lives when they experience the biggest financial changes, such as purchasing a home or automobile.

UK - UK Life events - Chart 1

Banks can grow by supporting customers in achieving their financial aspirations.

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UK - UK Life events - Chart 2

Well over half of young and senior millennials, and nearly half of Gen X, have at least one major event planned within the next two to three years. The good news is that the primary banking provider has a significant edge over the competition as the first choice for assistance with finances.

One potential solution is to offer feature-rich, personal-financial management apps.

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Despite their preference for digital banking, Gen Xers and senior millennials are most comfortable with an in-person financial advisor. This suggests that UK banks could benefit from initiating such interactions through well-timed outreach as well as by making more financial advice and information easy to access via digital channels.

UK - UK Life events - Chart 3

Security Is Paramount

UK customers concerns about security may be affecting their banking habits.

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UK banks have made strides in empowering customers with technology-driven transaction options but continue to underperform in delivering the safety and security customers want. This may be starting to affect customer banking habits. .

Safety and security continue to rise in importance with PSD2 looming.

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Year over year, Security and Safety have been the top concerns of UK banking customers – and their banks are still not meeting their expectations. With PSD2 (Payment Service Directive 2) on the horizon and a flood of open banking APIs hitting the market, there could be real concerns about protecting customer data.

More UK customers are foregoing plastic, why?

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This year's PACE survey revealed that nearly one-half of UK customers do not currently have a credit card at all. This is a dramatic increase from the prior year and may signal a seismic shift in how UK customers bank and pay for goods. It's primarily older customers who are forgoing plastic, as only 15% of young millennials report not having a credit card.

Open banking directives are likely expose both banks and customers to risks.

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Opening banking rules and regulations may be a boon to UK fintech companies but they could also expose customer data to a range of potential threats. To date, most UK customers are noticeable cold to the idea of sharing their banking data with unknown third parties.

Retail Payments

UK banks have opportunity to improve credit card penetration.

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Overall, UK banks have achieved significant credit card penetration with their customer bases. An additional benefit to improving penetration is ushering customers into credit card loyalty programs, which appear to improve overall satisfaction.

Older customers are forgoing plastic in general.

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Nearly one half of UK customers do not currently have a credit card at all, up dramatically from prior years. Primary banking providers aren't getting as much of their older customers credit card business as they are from their younger customers, as only 15% of young millennials report not having a credit card.

UK - Retail Payments - Chart 1

The primary bank only has 37% credit card penetration with their customer base.

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UK - Retail Payments - Chart 2

UK banks have much room for improvement around credit card penetration with their current account holders. According to the 2017 PACE survey, 20% of UK customers have a credit card exclusively with their primary bank and another 17% have multiple cards, including their primary banks card.

Credit card loyalty programs may improve customer satisfaction.

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Not being recognised and rewarded for their business is a common complaint among UK customers. However, digging into the PACE data, it's clear that customers who use their primary banks credit card exclusively have less negative views around Recognition — with a 7-point swing for this KPI.

UK - Retail Payments - Chart 3

Digital Is Not Optional

Despite Germany’s reliance on cash, banks cannot ignore or delay the digital revolution.

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Increasingly, German banking customers expect to be able to access their accounts any time, from anywhere, and send and receive money with a few clicks or taps. These are no longer nice-to-have features.

Digital is already the primary way customers connect with their banks.

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More than 70% of all users have gone online to check their balances, view recent transactions, pay one or more bills, transfer funds between accounts or receive bank notifications.

Germany - Digital Payments - Chart 1

Digital payment options have become more important for all age segments.

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Germany - Digital Payments - Chart 2

The importance of digital payment options has risen year over year for all German age segments, most dramatically for millennials but also for Gen Xers.

Use of P2P apps is becoming more common.

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In Germany, as elsewhere, digital payments are becoming more common, especially among young millennials. However, consumers are not tied to their primary bank’s mobile app and report using outside P2P apps regularly, though not as frequently.

Germany - Digital Payments - Chart 3

Top of phone

Mobile payment options are now essential to all consumers.

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German banks are now in a battle for top-of-phone status as digital payments continue to catch on with consumers, especially younger ones.

Young millennials lead the way for digital payments.

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Mobile payments have gained the most traction among young millennials. Online shopping and paying utility bills are the most common uses followed by paying for travel.

Germany - Top of Phone - Chart 1

Young millennials have embraced digital payments wholeheartedly in the last year.

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Germany - Top of Phone - Chart 2

Digital payment options have risen in terms of importance, year over year, for all German age segments—but none more than millennials, who have catapulted in front of older generations in their desire for such capabilities.

Young millennials are most likely to use their bank’s app for P2P payments.

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Compared to older generations, Germany’s young millennials are twice as likely to use their primary bank’s mobile app to pay other people.

Germany - Top of Phone - Chart 3

Life Events

Where banking meets life

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German banks have the greatest opportunity to grow by better aligning their products and services with consumers’ key life events and taking on more of an advisory role.

Collectively, Gen Xers and senior millennials are high-income, highly active banking customers.

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Senior millennials and Gen Xers are nearing the height of their earning potential, making more than €2,200 a month. They’re also at the time of their lives when they experience the biggest financial changes, such as purchasing a home or automobile.

Germany - Life Events - Chart 1

Banks can grow by supporting customers in achieving their financial aspirations.

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Germany - Top of Phone - Chart 2

More than half of Germany’s millennials and nearly half of its Gen Xers have at least one major event planned within the next two to three years that will affect their finances. The most commonly reported upcoming life event was purchasing an automobile.

Gen Xers and senior millennials are most interested in hearing from a trusted in-person financial advisor.

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Despite their increasing preferences for banking digitally, Gen Xers and senior millennials are still most comfortable with an in-person financial advisor. German banks could benefit from initiating such interactions through well-timed outreach to coincide with the likelihood of key life events.

Germany - Top of Phone - Chart 3

Retail Payments

Credit card penetration is very low and presents an opportunity for banks.

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German banks have a significant opportunity in helping consumers to migrate from cash to plastic and from plastic to virtual cards.

Just 26% of consumers currently have a credit card.

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According to the 2017 PACE survey, nearly three-quarters of German consumers do not currently have a credit card. Of those who do have a credit card, the primary banking providers are getting the largest share of accounts.

Germany - Retail Payments - Chart 1

Millennials are the most attractive targets for credit card offers.

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Germany - Retail Payments - Chart 2

German banks have the most room for improvement around credit card penetration with millennials. According to the 2017 PACE survey, 83% of senior millennials (age 26 – 36) have no credit cards.

Credit card loyalty programs may improve customer satisfaction.

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Not being recognised and rewarded for their business is a common complaint among consumers everywhere, including Germany. However, consumers who use their primary bank’s credit card exclusively have less negative views around Recognition and Aspirations KPIs.

Germany - Retail Payments - Chart 3

Digital Is Not Optional

Demonetisation has pushed India to embrace
digital banking wholeheartedly.

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Across all age segments, Indian banking customers expect to be able to access their accounts any time, from anywhere, and send and receive money with a few clicks or taps. These are no longer nice-to-have features.

Millennials lead the way for digital payments.

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Right now, amongst banked individuals responding to our survey, more than 50% of common payment types are done with mobile apps (versus cash, cheque or credit/debit cards). Mobile payments have gained the most traction among young Gen Y, with senior Gen Y rates catching up.

India - Digital Payments - Chart 1

Digital payment options have become notably more important.

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India - Digital Payments - Chart 2

The importance of digital payment options has risen year over year for all age segments – most dramatically for older generations, who want convenient access to money in the face of demonetisation.

Use of P2P apps is becoming an everyday occurrence for younger generations.

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Most notably, digital payments are becoming more common, especially among young and senior millennials. However, consumers are not tied to their primary bank’s mobile app and report using outside P2P apps almost as regularly as their bank’s dedicated app.

India - Digital Payments - Chart 3

Top of Phone

Mobile payment options are now essential to banked consumers.

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Indian banks are now in a battle for top-of-phone status, as digital payments are becoming nearly equal to cash when paying for things.

India’s millennials lead the way for digital payments.

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Mobile payments have gained the most traction among millennials. This cuts across most common activities, including paying for entertainment and travel as well as online shopping.

India - Top of Phone - Chart 1

Indian consumers have embraced digital payments wholeheartedly since demonetisation.

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India - Top of Phone - Chart 2

The importance of digital payment options has risen in terms of importance year over year for all consumer age segments – but none more than baby boomers, who have catapulted in front of their younger counterparts in their desire for such capabilities. Demonetisation is likely to be a significant influence in this finding.

Senior Gen Y consumers are most likely to use their bank’s app for P2P payments.

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Even older generations are using mobile P2P payment options. Nearly half of India’s baby boomers report having paid someone using their primary bank’s mobile app.

India - Top of Phone - Chart 3

Life Events

Where banking meets life.

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Indian banks have the greatest opportunity to grow by better aligning their products and services with consumers’ key life events.

Nearly all consumers will need financial assistance in the near future.

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A sign of India’s fast economic rise, more than nine out of 10 respondents under the age of 52 expect to experience at least one key life event in the next two to three years that will affect their finances.

India - Life events - Chart 1

The young have the hardest time accessing trusted financial advice.

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India - Life Events - Chart 2

According to PACE data, India’s young and senior Generation Y members report the most difficulty finding people who can knowledgeably answer questions about financial services and products.

Consumers can be served cost-effectively via personal financial management apps.

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In general, perceived affordability and lack of enough financial assets are barriers to seeking financial advice. But these drawbacks could be mitigated with personal financial management apps, including online chat, online educational forums, interactive tools and improvements in website navigation to find information more easily.

India - Life events - Chart 3

Retail Payments

Credit card penetration is improving rapidly in India

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As consumers move away from cash to embrace plastic and virtual cards, India’s banks have an opportunity to grab top-of-wallet status.

Credit cards provide a major growth opportunity

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In India, the primary banking provider controls 57% of credit card accounts. However, only 18% of respondents have a card exclusively with their primary bank.

India - Retail Payments - Chart 1

Credit card penetration increased substantially from 2016.

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India - Retail Payments - Chart 2

A large number of Indian consumers have acquired a credit card for the first time recently. The percentage of people reporting owning a credit card has increased 25% over last year’s survey.

Even so, virtual cards may leapfrog plastic in use and acceptance.

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Compared with the global norm, India is making the shift from physical to virtual cards more quickly. As the usage of mobile phone payments increases, we can expect to see plastic cards to disappear altogether as virtual cards overtake them.

India - Retail Payments - Chart 3

Global Report

Shifting demographics and Fintech disruption are creating demand for a new level of service.

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While global bank scores are generally improving against expectations, customers across all generations want to connect with their banks at their convenience, at any time and from anywhere. Millennials are leading the way, with Gen X and baby boomers fast followers.

Digital banking continues to increase in importance globally.

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Global customers across all generations want to connect with their banks at any time, from anywhere. DIGITAL PAYMENTS (provides me with digital payment options for my financial transactions) gained eight points in importance while CONNECTED (enables anywhere, anytime access to my accounts through online and mobile banking) and IMMEDIATE (responds fast enough to keep up with me) both gained three points in importance.

Young millennials lead the way for digital payments.

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Globally, 13% to 23% of common payments are done with mobile apps (versus cash, check or credit/debit cards). Mobile payments have gained the most traction among young millennials (18-25). Online shopping and paying bills are the most common uses. Online contacts with banks will continue to shift to mobile as anywhere, anytime access gains importance.

Personal financial management (PFM) apps provide the greatest opportunity to win over young customers

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Many customers, especially millennials and Gen Xers, desire a more advisory relationship with their banks. Yet less than one-third of customers have financial advisors, due to affordability or the perception of having to few assets to warrant an advisor. These drawbacks could be mitigated with personal financial management apps, which can offer online chat, educational forums, interactive tools and easy-to-find information.

U.S. Consumer Report

Banks must do more than offer technology-driven convenience.

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Banks have made strides empowering customers with convenient transaction options. Where banks underperform is with managing the customer relationship and understanding customer wants and needs.

The top 50 banks are winning the battle for millennials for now.

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Currently, 54% of young millennials (18-25) bank with the top 50 global banks, which have been first to market with digital solutions. However, a lower proportion of senior millennials (26-36) report banking with the top 50. There may be opportunities for smaller banks to win customers if they offer the digital solutions that millennials, and more often Gen Xers and baby boomers, want.

U.S.A - Country - Chart 1

The primary bank is the first choice of customers when they want financial assistance.

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U.S.A - Country - Chart 2

Across the board, when asked where they would turn for financial assistance for a key life event, U.S. customers overwhelming cited their primary banking provider as their first choice for assistance when buying a home, starting a business or tackling other key life events.

But competitors step in and capture customers before they contact their primary bank.

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Customers' first-choice intentions are rarely realized, as competitors step in to capture these customers often before they have contacted their primary bank. This can be seen in the low percentage of key accounts held by the primary bank. Banks need to better coordinate outreach and align marketing with the likelihood of key events in customers lives. The key to driving such touchpoints is in-depth, targeted analysis of the demographic, transactional and socioeconomic data within banks own systems.

U.K - Country - Chart 3

U.S. Small-Midsize Business

SMBs demand digital banking solutions and they're switching banks to get them.

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Small-midsized businesses (SMBs) are switching banks with increasing frequency due to concerns over pricing and the lack of modern products and services. Community banks and credit unions are the most at risk of losing customers.

SMB adoption of mobile P2P payments is outpacing the customer market.

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It's clear that person-to-person (P2P) payments are very important to SMBs, which regularly use these apps to pay vendors and suppliers. The data also reveals that a shocking number of SMBs use non-bank financial apps to pay vendors and suppliers, suggesting an unmet need with their primary banks mobile apps.

US SMB Chart 1

Mobile is an urgent pain point for smaller banks targeting SMBs.

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U.S SMB Chart2

Mobile banking has gone mainstream, but community banks lag badly in penetrating their customer bases with mobile banking apps. What's more, all banks must strive to provide business customers with mobile banking apps that enable a wide range of transactions.

Expect to see more SMBs switch primary banks in the coming year.

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All the PACE data indicates a clear reckoning is afoot for the SMB banking sector. Many SMBs, especially younger ones, are actively considering making a switch for better pricing and digital services. In fact, PACE found that 48% of SMBs switching banks cited a lack of desired products or services.

U.S SMB chart 3

US Community

Community banks are clearly at a crossroads.

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Community banks have made some progress in offering digital solutions but are still painfully slow to adapt to customers changing needs for access and for services that align with their life events. Customers might not wait much longer for them to catch up.

57% of community bank customers are over the age 51.

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Community banks' customers are overwhelmingly older and far less active in their banking practices. Senior millennials and Gen Xers — the demographics that offer the most potential for growth — only account for 37% of customers. Without focused effort in improving services and investment in desired digital technologies, community banks as a category may face a dramatic shakeout.

Digital payments are a must for attracting new, younger customers.

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Growth in mobile transactions and payments year over year show that mobile adoption is accelerating, driven by young millennials, but coming from a slower start at community banks. However, millennials are more than twice as likely to use an outside app for peer-to-peer (P2P) payments rather than their primary banking providers app. Community banks are simply not competing well (or at all) in this arena.

Community banks are also losing their customers' credit card business.

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Community banks are losing their customers credit card business to competitors. Worse, half of community bank customers don't have credit cards at all. The magnitude of the problem can be seen in the fact that only 17% of community banks customers hold a credit card from their primary bank — less than half of the U.S. average of 38% for all banking providers.

UK

Customers are embracing digital banking but have security concerns.

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UK banks have made strides in empowering customers with technology-driven transaction options but continue to underperform in delivering the safety and security customers want. This may be starting to affect customer banking habits.

UK customer priorities are shifting toward digital convenience.

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This year's PACE data shows a shift in what's important to UK customers. Safety and Security are still the top priorities for customers and their importance increased from 2016. Connected anytime, anywhere access via mobile or online channels is now the fourth-most important Key Performance Indicator (KPI) for UK banks. Similarly, though further down the priorities list, digital payments saw its importance increase six points.

U.K - Country - Chart 1

High Street banks dominate, but older customers may look for alternatives.

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U.K - Country - Chart 2

For now, the top 50 global banks are winning the lion's share of customers, most notably millennials, of which 80% report banking with these large providers. However, separate out Senior millennials (26-36) from their younger cohorts, and a lower proportion report banking with the top 50. That's likely because both young and senior millennials report being far less satisfied with their banks than older customers.

UK banks need to transition from transactions to aspirations.

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Well over half of young and senior millennials and nearly half of Gen X have at least one major event planned within the next two to three years. The good news is that the primary banking provider has a significant edge over the competition as the first choice for assistance with finances if they can be there at the time of need to keep competitors from poaching customers.

U.K - Country - Chart 2

Germany

German consumers are embracing digital banking but more slowly than others.

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Germany’s banks have a great opportunity to help move the country’s economy away from cash and toward credit and virtual cards as digital banking solutions start to catch on, especially with younger generations.

German consumer priorities are shifting toward digital convenience.

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Safety and Security remain the top priorities for consumers but Connected – anytime, anywhere access via mobile or online channels – is now the fourth-most important KPI for German banks.

Germany - Country - Chart 1

Savings banks and cooperatives are the most popular banking options for all age segments.

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Germany - Country - Chart 2

In Germany, savings banks hold the largest share of customers across all age groups, and cooperative banks come in a distant second. The top 50 global banks have made inroads with the older populations, most notably baby boomers.

The importance of digital payments has increased for all age groups.

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The importance of digital payment options has risen year over year for all age segments – most dramatically for millennials but also for Gen Xers.

Germany - Country - Chart 2

India

India’s consumers are embracing mobile payments wholeheartedly.

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The government’s rapid demonetisation (removal of large currency notes) has spurred Indian consumers of all age groups to shift quickly to digital payments.

Digital payment options have become an absolute must for most consumers.

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The importance of digital payment options has risen year over year for all age segments – most dramatically for older generations, who want convenient access to money in the face of demonetization.

India - Country - Chart 1

Senior Gen Y consumers are most likely to use their bank’s app for P2P payments.

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India - Country - Chart 2

Even older generations are using mobile P2P payment options. Nearly half of India’s older generations report having paid someone using their primary bank’s mobile app.

In just a few years, virtual cards may leapfrog plastic altogether in use.

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Compared with the global norm, India is more quickly making the shift from physical to virtual cards. With each new generation, expect plastic cards to disappear altogether as virtual cards overtake them.

India - Country - Chart 3

2017 PACE Report

In its third year, the Performance Against Customer Expectations, or PACE, report provides an in-depth look at what customers feel, think and want from their financial institutions. It not only helps drive FIS product priorities, but also provides meaningful and unique intelligence that connects our clients with their customers in more effective ways.

Methodology

The PACE report polls 8,000 customers around the world about their expectations of their primary financial institutions, and how well those expectations are being met. The results are compared against 18 key attributes that allow us to evaluate how banks perform against their peers. As customers needs and wants change, the PACE report enables banking providers to identify the opportunities to become or remain first in the minds of customers. We also surveyed nearly 500 small-midsize businesses.

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