There’s a subscription for that
The COVID-19 pandemic has accelerated the adoption of subscription services across Europe. In our latest blog, we explore what’s driving this trend - and what it might mean for the future of banking.
4 min read
The COVID-19 pandemic has upended the way we live, work and play, and accelerated countless trends already in evidence. These include the shift to remote working, the transition to digital retail - and one we’re going to take a closer look at; the adoption of digital subscriptions.
Digital subscriptions have been gaining popularity over the past decade, and it’s easy to see why. As our lives become busier and our time evermore stretched, they offer us access to services on tap. We can now receive regular installments of the latest fashion, culture, entertainment - even pet products - delivered straight to our door, laptop or TV.
And this model has become even more popular over the last year. According to our recent research, conducted amongst over 6,000 consumers across Europe, a third (31%) now have more subscriptions than they did prior to the pandemic. Stuck in their homes with no one to see and nothing to do, Europeans have turned to digital subscriptions in their droves.
Right now, 41% of Europeans have two or three subscriptions - and a quarter (24%) have four or more. And with lockdown restrictions limiting social activities, it seems that consumers are happy to channel funds into these services. People are now spending, on average, €38.75 per month on subscriptions - or €465 annually.
Digital natives driving adoption
Our research indicates that it’s younger consumers really driving this trend. Over a third (37%) of 18-24 year olds have more subscriptions than they did before the pandemic - and 43% of 25-34 year olds. This is compared to just 9% of 65 year olds.
Younger groups are also more likely to have more subscriptions (33% of 18-34s have more than four), and pay more for them. Those in the 18-24 bracket spend, on average, €47.74 per month (€573 annually), while over 65s spend under half this, at €20.01 per month (€240 annually).
This trend won’t come as a shock to many. It stands to reason that those born and raised in the internet era are going to feel more confident adopting digital services. However, subscriptions shouldn’t be viewed as something solely for the young. Adoption is also increasing among older consumers - albeit at a slower rate. We also have to remember that people age. The 18-24s of today are the 45-54s of tomorrow - but their preference for digital subscriptions may well remain. Service providers of all types need to start thinking about how they can adopt a digital subscription model - or risk being left behind.
Consumers seeking flexibility
Another trend that comes across loud and clear in our research is consumers’ need for flexibility. People don’t want to sign up to a service, only to be tied to it for the next 12 months. Indeed, almost a third of Eureopeans (32%) say that the most important benefit they look for in a subscription is the ability to cancel without a penalty at any time. Almost as many (29%) want to have the freedom to access their subscriptions any time and from anywhere.
This requirement is very much linked to the wider digitalisation of our lives. If people can order a pizza or taxi to their door at 2am, they expect to be able to turn a subscription on or off, or personalise their experience with the tap of a button.
Appetite for additional services - and what this means for banks
As consumers become more familiar with the subscription model, they’re gaining an appetite for additional services. Emerging from the global health crisis, 16% of Europeans would sign up to a food, or health and medication subscription.
Demand also extends to other essential services, with one in ten (10%) interested in banking subscriptions. This is significant, as it could signal a further gear shift in the relationship between consumer and banking provider.
Over the last decade the banking sector has been shaken by challengers, such as ourselves. We’ve upended traditional notions of what a bank is by providing a different kind of service, one which is a lot more personal - and focused on what we can do for customers - rather than the other way round.
Our research suggests that our approach is hitting home, and people are now expecting more from their banks. Almost a third (31%) say they’d want a guaranteed 10% cashback on purchases as part of a banking subscription, and a fifth (21%) would want car insurance.
At a time when many European banks are increasing their fees for basic services by as much as €20 per month, our research gives real food for thought. Consumers clearly want fast, flexible, digital services, that reward them for their loyalty by giving them exactly what they need when they want it. If banks want to remain relevant and competitive they need to consider how they can meet these demands.
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