# Why the banking industry needs to offer more than just enticing perks and subscription services Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2020-11-06 Category: BANKING Category URL: https://financedigest.com/category/banking Meta Title: The Rise of Subscription Services in Finance: Opportunities Meta Description: Explore the growth of subscription services and the implications for young customers. Learn how banks can offer transparency and education in managing finances. URL: https://financedigest.com/why-the-banking-industry-needs-to-offer-more-than-just-enticing-perks-and-subscription-serviceshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/untitled-design-2020-11-06t175025-1736838740507-compressed.jpg) _By **Josipa Majic,** CEO and founder, [Revuto](https://revuto.com/)_ The subscription economy has experienced significant uptake in the last few years, with McKinsey estimating that the upstart industry of subscription boxes has grown by more than [100 per cent every year since 2011](https://www.telegraph.co.uk/technology/2019/10/12/rise-subscription-economy-means-pocket/). This growth suggests that there are valuable opportunities within this realm, which is visible from the entertainment and retail industries which include successes such as Netflix, Spotify and Amazon Prime. Subscription services are particularly appealing to Gen Z and millennials customers, often because they no longer want (or have) the purchasing power to buy assets. Therefore, they turn to the subscription model, where they can have easily recurring payments for everything, from insurance and telcos, to entertainment and shopping. Many [challenger banks](https://www.financedigest.com/the-rise-of-challenger-banks.html "challenger banks"), such as Monzo, are beginning to notice this appeal and following suit by finding new ways to offer their customers ‘perks’ such as metal cards and phone insurance, all at a monthly cost. Whilst this can be seen as a positive and beneficial way for the banks to generate ongoing and consistent [revenue and to maintain retention rates to meet the ever-changing demands of the market](https://www.financedigest.com/railway-bearing-market-size-2021-key-manufacturers-industry-share-investment-opportunities-future-trends-market-impact-revenue-demand-and-analysis-by-forecast-2030.html "Railway Bearing Market Size 2021 Key Manufacturers, Industry Share, Investment Opportunities, Future Trends, Market Impact, Revenue, Demand and Analysis by Forecast 2030"), it can also have negative implications for customers, particularly for Gen Z and millennials. Due to their situation, they may often need help to manage their unpredictable and complex [cash flow](https://www.financedigest.com/xerox-shares-slide-as-annual-revenue-cash-flow-forecasts-take-a-hit.html "Xerox shares slide as annual revenue, cash flow forecasts take a hit"). **Subscriptions in the** [banking industry](https://www.financedigest.com/the-survival-of-the-banking-industry.html "THE SURVIVAL OF THE BANKING INDUSTRY") While using a [subscription model](https://www.financedigest.com/the-rise-of-the-subscription-model.html "The rise of the subscription model") may be beneficial to financial institutions, it is also their responsibility to protect their customers and ensure they are educating them on their finances. All banks, including neobanks should build and maintain [consumer trust](https://www.financedigest.com/trusting-in-trust-marks-enhancing-consumer-trust-in-your-ecommerce-business.html "Trusting in trust marks: enhancing consumer trust in your ecommerce business ") and have their interests aligned and provide complete peace of mind knowing that their funds are fully protected. With [consumers dealing with so much uncertainty](https://www.financedigest.com/adapting-payments-to-reassure-consumers-and-safeguard-profitability-during-times-of-uncertainty.html "Adapting payments to reassure consumers and safeguard profitability during times of uncertainty"), one aspect they do want complete control over is their finances. Research has found that more than [one in four people in the UK are not happy](https://www.cisi.org/cisiweb2/cisi-website/about-us/press-release/2020/09/24/more-than-1-in-4-(26-)-of-uk-consumers-not-confident-about-their-finances-post-covid-19-says-cisi) about their financial situation following the COVID-19 pandemic, banks should be supporting their customers and guiding them on their financial journey, whether it’s by including more transparent chargeback features and policies, as well as helping consumers to proactively cut costs for any unwanted products or services. ![Josipa Maijic](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/josipa-majic-revuto-450x492-1736838740211-compressed.jpg) Josipa Maijic Alongside that, subscriptions and recurring expenses are also increasing 100 per cent year-on-year. [Banks have the opportunity to become a crucial source of transparency and education in helping their customers](https://www.financedigest.com/knowing-your-customers-needs-is-essential-for-banking-innovation.html "KNOWING YOUR CUSTOMERS’ NEEDS IS ESSENTIAL FOR BANKING INNOVATION") to better understand hidden fees, such as free trials that are almost impossible to cancel and other forms of expenses that consumers don’t fully understand yet. [Banks should be doing more to advise consumers](https://www.financedigest.com/what-vrps-should-do-to-improve-the-experiences-of-open-banking-consumers.html "What VRPs should do to improve the experiences of Open Banking consumers") on how to better manage their money. **Maintaining trust and transparency** A large part of where both traditional and challenger banks are going wrong is that they get wrapped up in strategising and lose sight of what matters, and it all boils down to having a true understanding of their customer base. Understanding this means it helps them to better understand their [customers’ needs](https://www.financedigest.com/the-bank-of-me-why-banks-need-to-be-totally-customer-centric.html "The bank of me – why banks need to be totally customer centric") and allows them to implement the fundamental building blocks to create authentic, meaningful relationships. Part of building strong relationships with [consumers is personalisation and providing a tailored service](https://www.financedigest.com/do-consumers-want-robo-advisory-services.html "DO CONSUMERS WANT ROBO-ADVISORY SERVICES?"). Research has found that [90 per cent of consumers](https://www.slideshare.net/EpsilonMktg/the-power-of-me-the-impact-of-personalization-on-marketing-performance/1) appreciate a personalised service, and, with this in mind, banks should be monitoring their customers’ spending habits and providing advice on best practice, particularly when it comes to subscriptions. [Nearly a fifth of people never review their subscriptions and as a result](https://www.financedigest.com/rouble-steadies-near-60-vs-dollar-tcs-m-video-shares-down-after-results.html "Rouble steadies near 60 vs dollar; TCS, M.Video shares down after results"), half of them are paying for a service that they either don’t use or get value for money. Consumers will most certainly [benefit from a personalised service](https://www.financedigest.com/how-guest-blogging-service-benefits-your-small-business.html "How Guest Blogging Service Benefits Your small Business?") from their bank that provides complete transparency and allows them to review their subscriptions and easily manage them – whether it is simply approving, snoozing or blocking and cancelling a payment. [Banks and many other financial institutions must remember that they have the responsibility to care for their customers](https://www.financedigest.com/how-close-can-banks-get-to-their-customers.html "How close can banks get to their customers?"), this must be put first before profiting off bad decision making. Banks, in particular, stand between the individual and the economy, they should advise their customers on how to look after their money and help them become financially [secure](https://www.financedigest.com/top-fintech-trends-for-2021-enabling-smart-and-secure-finance.html "Top Fintech Trends for 2021 Enabling Smart and Secure Finance") through genuine guidance. Once banks decide to prioritise their customers, they will then be able to offer alternative [services that will benefit their customers](https://www.financedigest.com/how-customer-services-has-changed-during-covid.html "How Customer Services Has Changed During Covid"), such as perks e.g. [travel insurance](https://www.financedigest.com/benefits-of-taking-out-travel-insurance-2.html "Benefits of taking out travel insurance"), free international ATM withdrawals, and discounts at selected retail stores and restaurants. While there’s no denying that we are going to see the financial [services industry](https://www.financedigest.com/why-sustainability-presents-one-of-the-greatest-opportunities-for-the-financial-services-industry.html "Why sustainability presents one of the greatest opportunities for the Financial Services industry") move to a subscription model, it’s vital that banks adapt their strategies to focus on building consumer trust, improving their customers’ financial health and offering more personalised value propositions. But what should be at the heart of their strategy is providing a financial [wellness service](https://www.financedigest.com/uk-says-baker-hughes-altus-deal-may-hurt-competition-in-oil-well-services.html "UK says Baker Hughes-Altus deal may hurt competition in oil well services") that allows their customers to easily manage and control their payments, as well as complete transparency over their finances and regular communication from advisors who can provide smart financial advice. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---