New Thought-Leadership Study Calls on Banks to Act Now to Avoid Subscription-Related Costs 

New findings show subscription-related disputes are costing a bank on average $136 million per annum and can be up to $200 million for larger banks. Negative customer experience and increased risk exposure is on top of that cost. Increased budgets are being allocated towards improving self-serve and end-to-end digital experiences to address these challenges. 

New York, NY Feb 23, 2022– According to recent findings from a commissioned study conducted by Forrester on behalf of Minna Technologies, the cost of subscription-related disputes have increased. Banks pay an average of $136 million for subscription-related disputes and banks with more than 15 million customers are the most heavily hit. More than 30% of respondents from banks of that size said the average annual cost of subscription-related disputes is more than $200 million per annum.

Today, Minna Technologies, the Swedish Subscription Management Embedded FinTech, announced findings from a Forrester Consulting thought leadership paper Banks Must Act Now to Avoid Subscription-Related Costs. The study reflects survey findings from over 300 senior bankers in the United States, United Kingdom, and Australia and illustrates the severity of the issue, the projected effect and their solutions, and respective budgets to address it. 

As the subscription economy boomed, consumers have increased financial exposure to unrecognized subscriptions transactions and free trials, auto-renewals, and negative option subscriptions, where an individual feels “tricked” into a subscription plan and gets stuck in a payment cycle. Most commonly consumers call their banks looking for solutions.

Particularly in the regulated markets of the United States, United Kingdom and Australia, the rise in overall numbers and types of subscriptions have resulted in an increased desire for customer protection. Banks, aiming to support the whole payment and management ecosystem of their clients,  are currently facing a dual challenge; address both customer demand and combat rising subscription related costs by offering solutions that blend customer self-service with operational efficiency.

The findings below illustrate where banks are feeling the pain and their plans to respond in the coming 24 months:

  • Three quarters of banks say that they have seen subscription-related dispute volumes increase by more than 10% in the past 24 months.
  • 80% of respondents said their bank increased its technology budget for dispute resolution during the past 12 months, and 76% said their bank is increasing its budget during the next 24 months.
  • End-to-end solutions are top or critical priority for 82% of banks and 77% are actively improving the user experience in digital channels.
  • To help address both customer demand and combat rising subscription related costs, banks are looking for solutions that blend customer self-service with operational efficiency. Eighty-one percent of respondents said reducing the customer’s need for assistance with simpler forms and self-service is a top priority. Respondents also said that reducing the cognitive load on customers is a priority.
  • Banks reflect that 75% of their’ customers welcome self-service capabilities to help them keep control of their finances and as a result, the future investment is reported to be going into subscription comparison and switch capabilities (44%), subscription activation / change monitoring (47%), single view of subscription capabilities (51%) and  self-service subscription cancellation capability (52%). 

Along with increasing customer service efficiency, respondents anticipate investment in dispute management technology to aid fraud reduction, and lower costs for disputes and back office operational costs.

Joakim Sjöblom, CEO of Minna Technologies says: ‘The wave of subscription adoption, accelerated by COVID and projected to continue, has had a derivative effect on the banks’ balance sheets, has interrupted digital self-service experience customers demand, and has increased banks’ risk profile. UK, US, and Australian banks are allocating budgets to correct the trend, implementing solutions to simultaneously serve their customers while streamlining end-to-end services to support the subscription economy.’

Jacob Wanstall, Product Owner, Group Transformation, Lloyds Banking Group says: ‘ Over the last few years we’ve seen a noticeable increase in calls relating to subscriptions. Working with Minna Technologies, we’ve been able to respond quickly to feedback and have created a self-serve process which means customers can easily manage their subscriptions directly within the mobile app. This has not only made life easier for customers, improving overall mobile app experience, but it has also reduced call volumes into our Contact Centres.’

Pascal Bouvier, Partner, MiddleGame Ventures comments:From a meta perspective, the nature of a banking account has changed; customers expect a richness to their account feature set, a frictionless experience, and transparent, initiative and instantaneous access to their finances. In parallel, banks seek to eliminate manual processes, the associated cost and risk, while aiming to satisfy the customer’s desire for control. The solution is a win-win for the retail client and the banks.’

Anthony Jones, Head of Innovation and Partnerships, Visa Australia, New Zealand and South Pacific said: ‘Subscription services are growing rapidly in Australia, and consumers want greater visibility and control over these digital payments. Through our partnership with Minna, Visa is helping banks solve a key pain point for consumers and embrace the opportunities in digital self-service tools. In addition, our Visa card tokenization technology takes the friction out of recurring payments, enabling a more seamless, secure customer experience online.’

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Minna Technologies, established in 2016, is creating a problem-free subscription economy by building the infrastructure connecting financial institutions and subscription merchants, solving all parties’ needs in a subscription-based economy. Partnering with top-tier banks across Europe and backed by some of the biggest financial companies in the world, currently, around 20 million people benefit from Minna’s subscription solutions.