In the wake of the coronavirus pandemic, Hong Kong consumers have become more digital-savvy, selective and loyal to brands they trust when making financial decisions. They also expect retailers, banks and insurers to deliver enhanced digital experiences and are increasingly shifting towards financial service providers perceived as providing more “value” for online purchases by offering cash rebate and other immediate rewards upon payment.
These are some of the findings of accounting firm KPMG in its latest study on consumer behaviour in the city. The report reveals a preference shift towards leading digital organizations and towards payment methods offering immediate rewards for online spending. Banking and insurance consumers in the city also expect to continue using digital services more post-pandemic.
Consumers are experiencing economic constraints as a result of the health crisis. About 41 percent of survey respondents admit that they are being more selective in their purchases and expect this to continue in the medium term. According to the KPMG study, consumers have significantly reduced their spending in luxury and non-essential goods and have re-allocated this spending to day-to-day essentials such as groceries. However, the study observes indications of “Covid fatigue” as evidenced by a slight recovery in spending on non-essentials after the second wave of the pandemic.
Value for money, ease of shopping experience and product quality have been identified as the new key purchase drivers. The study highlights an increased emphasis on the digital, with consumers found to be purchasing more often from e-commerce sites than before and are likely to continue using online channels in the future due to the overall positive experiences. Some brands are building on the trust they have established with consumers by consistently delivering high-quality experiences aligned with their brand promise. Some online food delivery firms, in fact, are now expanding their services into groceries.
In financial services, consumers want banks to deliver enhanced digital experiences across channels, and the majority (45%) would like banks to have better functionalities on their apps and websites. Consumers expect to reduce their visits to branches in the future as they expect to be able to complete transactions and resolve related issues through digital channels, even though when it comes to significant and life-changing transactions, they believe branches still have a role to play.
Consumers think their banks should prioritize their digital security by focusing on better functionality on their website and app (45%), providing digital security to protect their accounts (42%), giving clear direction about how consumers should contact them (41%) and offering advice on how to avoid online fraud and scams (30%), the survey shows.
Similarly, while the majority of consumers are satisfied with the experiences delivered by insurers amid Covid-19, they also expect insurers to continue focusing on providing personalized, digitally enabled and efficient experiences. Insurance consumers expect to continue using digital more, especially for making a claim (+19%) and renewing a policy (+13%). However, the survey finds that spending on insurance has remained flat during this period, even when the general public has turned their attention to their health and wellbeing, which signals a potential missed opportunity for insurers to deliver best-in-class experiences.
Isabel Zisselsberger, partner and head of strategy and performance for financial services, Hong Kong, KPMG China, says: “Even if consumers in Hong Kong consider that banks and insurers have met their expectations during Covid, they are expecting more enhanced digital engagement and experience in the future. At the same time, customers also want physical interactions to be improved with reduced waiting times, good safety measures and with pop-up services available to provide personalized advice when required.”
Good online experience drivers identified by survey respondents are digital security (67%), seamless interactions (41%), personalized experiences (32%) and 24/7 customer service (29%).
In addition, financial services customers are showing increasing appetite for credit cards with generous cash rebate and other immediate discounts/benefits upon online spending, beating those offering loyalty benefits, mostly on airline credits. Compared to the fourth quarter of 2019 when leading cards with reward cash rebate took up 48.9% of the market share, in the second quarter of 2020, this percentage has increased to 69.7%.
Overall, banking consumers rank quality of products and services (49%), personal safety (45%) and customer experience (45%) as the most important considerations when purchasing banking products. Likewise, insurance consumers see value for money (57%), quality of products and services (55%) and trust in the brand (44%) as the important factors when buying insurance products.