Financial Services Online: Why Do Consumers Think Banks are Safer than Insurers?

A commentary by David Black, Founder and CEO, Blackbox Research

For most people, financial services have become an almost exclusively digital domain, with fewer and fewer consumers banking over phone calls or visiting an actual office. 

While financial scamming has undoubtedly evolved and created a huge headache for governments and institutions, this has still not dissuaded consumers from the very real convenience that 24/7 digital financial services offer.  We may spend more time worrying and shaking our heads at the scare stories in the news, but it seems that convenience still wins out for most in our busy daily lives. 

This does raise a question, however, as to what we feel safer doing. Which tasks and functions create more stress than others? 

“Analysis of some of Blackbox’s latest insights across Southeast Asia reveals that while consumers are pretty much on board for most types of digital banking services, they are more circumspect when it comes to online trading and – especially so – when it comes to buying insurance online. ”

What is causing this?  Why are consumers more likely to find buying insurance online unsafe and what more do insurance companies need to do to build trust amongst buyers?   

First and foremost, confidence seems to be lacking amongst younger consumers. Like their elders, many still feel in-person advice is more necessary with insurance. A recent study co-sponsored by American Express revealed, for example, that 75% of US Millennial and Gen Z consumers prefer in-person advice before buying insurance online. 

Second, it might also be the perception that it is harder to make a claim if you purchase a generic insurance product online compared to one you might buy direct from an insurance broker. This is often discussed in online forums, despite the scant evidence to support this notion. 

Other factors could include perceptions about the comparative cost, dangers of sharing information online, and limited options.   

Whatever the underlying factors, it is clear that insurance companies in Southeast Asia are missing important opportunities when it comes to the online market and are investing too little when it comes to promoting the benefits (including safety) of their online products. 

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