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How EY can help
Consumers who choose neobanks for their PFRs mostly use them for deposits and digital payments. The emergence of payments as a core service within PFRs gives neobanks a clear competitive advantage since their offerings are generally strong in this area. Digital payments are especially important in some markets. For instance, 92% of consumers in Mainland China use digital payments, but only 59% use deposit products. As deposit accounts become less central to PFRs, banks are likely to lose more ground to neobanks.
Longer tenure equals larger share of wallet
Banks have long used deposits and other core product offerings as a foundation for customer relationships and the basis for expanding their share of wallet. Payments are the foundation for neobanks’ relationships with consumers. But, as their average customer tenure increases, neobanks will penetrate high-value products like investments and loans. Many are already developing insurance and investment products aligned to the needs of their customer base. As Gen Z becomes a larger segment in financial services, traditional banks may begin to cede market share even within anchor product categories (e.g., accounts and lending).
The survey results demonstrate that consumers will add more products and services the longer they maintain their relationships with banks. That’s an issue for incumbents, because neobanks now have average customer tenures of more than five years.