4 Charts Explaining Why Americans Want to Buy Financial Services Directly From Their Brands – Tearsheet

With the emergence of many banking-as-a-service providers in recent years, the infrastructure now exists to allow non-financial brands across many industries to offer their customers access to integrated financial services that could potentially strengthen their relationship with customers.

The value offered by embedded finance is based on the assumption that consumers will choose to obtain financial products from the non-financial brands they use – if the brands choose to offer them. But how true is this assumption?

A recent report by consulting firm Cornerstone Advisors and integrated finance platform Bond finds that most US consumers are indeed interested in purchasing financial products and services from major brands such as Apple, Gucci and PlayStation because they trust to these brands and expect to be able to reduce their costs and save time by reducing their dependence on their bank.

The study asked consumers of different brands about their interest in 15 specific financial products. Some of the highlights include:

  • Three quarters of the players are interested in an in-game account where they could deposit money and use it to buy and sell virtual in-game items and collect rewards for in-game achievements and progress.
  • Almost two-thirds of fashion enthusiasts would consider getting an investment account from a luxury brand that would allow them to invest in that company’s stocks, crypto, and other assets.
  • More than half of DIYers say they would like to take out a home equity loan directly from their home improvement store, which could translate to $54 billion in loans.
  • Two-thirds of home fitness fans — who use apps and devices like Apple Watch, Fitbit and Peloton — have expressed interest in health insurance from home fitness providers.
  • Six out of ten car enthusiasts would investigate car insurance directly from a car manufacturer, with rates based on their personal driving history and behavior.
  • 64% of Gen Z and Millennials, and 60% of Gen X are interested in using an average of 15 different financial products from non-financial brands – with gaming, home fitness and fashion topping the list.

Source: Cornerstone Advisors/Bond

Among consumers who list technology and electronics as one of their top three categories, 35% have already obtained some form of financial service from a technology or electronics company. Similarly, one in four did so from a home improvement brand and 23% did so from the games category.

Source: Cornerstone Advisors/Bond

The impact of integrated finance goes beyond the revenue generated by the financial product. Around a third of consumers who access brands’ financial services directly say they now spend more money with the brand than before, three in ten say they now choose the brand over competitors more often, and more a quarter feel more brand loyal.

The potential big winners vary by category, but include brands such as Amazon, Apple, Chanel, Chevrolet, Fitbit, Ford, Gucci, The Home Depot and Walgreens.

Source: Cornerstone Advisors/Bond

Why do so many consumers want financial products from non-financial brands? The main reasons cited by respondents are that it would cost them less to obtain financial products this way (81%), that they like and trust the brand (61%), and that it would make it easier for them the use of financial products (58%).

Source: Cornerstone Advisors/Bond

On the other hand, among consumers who said they did not want financial products from a non-financial brand, almost eight in ten thought it would be difficult or inconvenient to manage the financial product with the brand, while 77% said they would not. Don’t trust getting a financial product from a non-financial brand.

Interestingly, only about half of respondents cited the reason why they prefer to obtain financial products from their current bank. The most prevalent reason was the fear that it would be inconvenient to manage the product – a concern that could potentially be overcome with improved delivery and execution.

The report’s author – Ron Shevlin, director of research at Cornerstone Advisors – says the end result of brands offering financial products is a “flywheel effect”: financial products not only drive revenue, they drive consumers to demonstrate a greater sense of loyalty and spend more money on overall brand products and services than before.

“Traditionally, improving loyalty has been a ‘cost’ for brands – they’ve tried to improve loyalty by offering discounts to bring in more business, or through loyalty programs that cost brands in terms of program administration and lower margins,” Shevlin told Tearsheet. “Integrating financial services generates revenue and improves loyalty – and the more financial services provided, the deeper the relationship and the greater the revenue. The potential for a brand is huge.

Roy Ng, co-founder and CEO of Bond, adds that in today’s macro environment, it’s more important than ever to build trust and drive spend with your most loyal customers. Credit solutions, in particular, will be increasingly relevant as brands seek to generate meaningful returns and customer loyalty by offering integrated financial products to their customers.

“What makes this really important – especially now that we seem to be heading into a period of great economic uncertainty – is that since consumers seem to trust brands more than banks, they may be more likely to turn to them during this time for financial services and support, and it could end up being a game-changer for brands and consumers,” Roy said.