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2019.07.03

The truth about ‘untact’ consumption revealed by credit card transaction data

People in their 40s join the convenient ‘untact’ market

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An average office worker calls a taxi using a mobile app to go to work. He orders lunch at a fast food franchise kiosk, and then on his way to a cafe he orders and even pays for his coffee using a mobile app, picking up his drink without the need to stand in line. Before going home he stops by at the supermarket to buy some necessities, paying at the unmanned checkout counter. In the unmanned delivery box installed at a convenience (CV) store in front of his house he retrieves some clothes and cosmetics he purchased online the day before. At the door of his apartment is some freshly cleaned laundry, which he requested to be picked up two days before. Now it’s time to open the delivery app on his phone and choose what to have for dinner.

Revenue generated from services that don’t require human contact has increased fivefold in two years

We live in a day and age where we could easily spend an entire day without interacting with someone else. Even if we encounter people like taxi drivers, workers at fast food stores or cafes, there’s truly no need for actual communication, which is not that different from facing machines or robots. This trend of an absence of or minimized human contact in the services industry has been termed ‘untact’ by “Trend Report 2018” published in Korea.

In particular, common habits of millennials, such as using digital devices on mobile devices, gathering information through social media such as YouTube, Facebook and Instagram, and most of all rejecting unnecessary interpersonal relations, fit right into the traits of the untact trend. In response, a myriad of companies are concentrating their efforts on untact marketing, especially with consumers in their 20s and 30s in mind.

At this point one should ask, is such consumption solely dominated by people in their 20s and 30s? Also, is the growth of untact consumption a culmination of fatigue built up from interpersonal relationships? The Hyundai Card·Hyundai Capital Newsroom chose untact as the theme for a special two-part article titled ‘Interpreting the world with data,’ which analyzes transaction data to interpret and understand diverse social phenomena. As a first step, the Hyundai Card·Hyundai Capital Newsroom worked with the Data Analytics team at Hyundai Card to analyze Hyundai Card spending data from January 2017 to May 2019 at 15 major merchants that offer untact services in order to have a better understanding about the untact consumption trend. Consumption, after all, is the most powerful manifestation of an individual’s will and the clearest metric to gauge changes taking place in society.

The analysis first confirmed that untact consumption is growing every year. The sales volume of 15 major merchants providing untact services grew approximately fivefold, from KRW 6.7 billion as of January 2017 to KRW 35.9 billion in May 2019. It further affirmed that the millennial generation is leading the untact market. Spending by those in their 20s and 30s accounted for 28.4% and 50.7% of the total revenue of the 15 merchants, respectively, meaning that millennials, mainly those in their 20s and 30s, contributed nearly 80% of total sales.

Increased rate of untact consumption by Koreans in their 40s shown to be growing fastest among all age groups 현대카드 결제 데이터 언택트

The most striking outcome of the analysis was that the demand for untact services by Korean consumers in their 40s was growing sharply. Untact service-related spending by people in their 40s from January to May 2018 increased by 160% year-on-year and during the same period in 2019 it grew by 131% compared to the previous year. This amounts to a whopping 499% growth over two years, which largely surpasses the growth rate of 235% by those in their 20s and the 304% increase among 30-somethings. While the 20-30s group created and expanded the market for untact services, the 40-somethings are rapidly coming onboard and scaling the trend to all age groups.

Spending increases in convenience stores and delivery services among those in their 40s was comparatively higher than for the 20-30-somethings. The spending amount by consumers in their 40s from January to May 2019 at unmanned convenience stores increased by 5,320% compared to 2017, outpacing consumers in their 20s at 2,555% and those in their 30s at 1,879%. Demand for delivery services also grew rapidly by 502%, more so than 20-somethings (230%) and 30-somethings (298%). On the contrary, the 20-somethings have shown the steepest increase in areas of transportation, food and beverages compared to those in their 30s and 40s.

68.7% of those survey named ‘convenience’ as the main reason for using untact services

Untact services are not a passing fad popularized by a small portion of consumers; they have become a part of everyday life. In a survey by Ipsos commissioned by the Hyundai Card·Hyundai Capital Newsroom of 1,000 people in their 20s to 50s, 90.9% of respondents stated that they’ve used untact services. More specifically, 77.6% said that they had more experiences with untact services in 2019.

현대카드 결제 데이터 언택트

An interesting result was that while 90.9% replied that they’ve experienced untact services, only 76.1% said they either know about or have heard of such services. It shows that 15 out 100 people are consuming in untact ways without even being aware of it, implying that untact services have already disseminated widely across society.

In the recent survey, 37.1% of the respondents said their usage of services coming into contact with human workers decreased after experiencing untact services; meaning that the conventional contact-based services market is being replaced with untact services.

What is leading consumers to turn to untact services? Commonly, the growth of untact services is attributed to fatigue from interpersonal relationships. However, survey results show that 68.7% of untact service users stated convenience factors such as ‘reduced waiting time for orders, payments, product and service delivery,’ ‘ease of payment,’ and ‘placing orders regardless of time and place’ as the reasons behind choosing untact services. On the other hand, ‘pressure of coming into contact with service providers or sales reps’ accounted for merely 10.7% of the respondents.

‘Non-face-to-face financial services’ shows highest level of satisfaction of untact services by category 현대카드 결제 데이터 언택트

Among the diverse untact services available in everyday consumer life, deliveries and food and beverage-related services were used by a disproportionately large number of consumers. Out of the survey respondents, 76.1% and 73% replied that they’ve experienced untact services in the delivery and food and beverage sectors, respectively, in 2019.

On the question of the level of satisfaction of these services, the results differed. 71.8% of the respondents said they were satisfied with financial services, the highest score among other services.

현대카드 결제 데이터 언택트

In fact, when Hyundai Capital, a representative specialized credit finance company and the No. 1 auto financing company in Korea, launched its ‘Digital Vehicle Finance application system’ in July 2017, the number of use cases rose from 4,706 in July 2017 to 30,737 as of May 2019, rapidly increasing by 550% over the span of two years. The share of applications by the ‘Digital Vehicle Finance system’ out of the total applications also increased swiftly, from 28.1% in 2017 to 64.9% in 2018 and 74.8% as of 2019. Such results were achieved by enabling consumers to apply for auto financing products through mobile then completing the process within 24 hours without the hassle of calling an agent, visiting a branch or submitting documents.

What’s more impressive is the fact that within seven months after the ‘Digital Vehicle Finance application system’ was introduced applications through the system surpassed the number of applications made via call agents. This implies that even financial consumers, who are deemed to be the most conservative, are also making the transition to untact services. Survey results show that he answer ‘pressure of coming into contact with service providers or sales reps’ as the reason for choosing untact services ranked No. 5 overall. However, it was the third-most-frequent answer when it came to financial services. These results signal a shift in consumer mindset; that even for financial services where accurate information is of the essence, direct contact with workers is no longer a necessity.

However, it is risky to interpret this as financial consumers being more reluctant to face service providers compared to consumers in other services. Among the respondents who said they’ve tried untact financial services but stopped using them, 74.7% said that the reason was because “it was impossible to talk in detail about the products and services with a worker or sales agent.” Also, the main reason for stopping using untact services in the transportation sector was the inconvenience of using devices such as mobile apps and kiosks. And when asked the same question about the delivery, supermarket, convenience store, and shopping categories, the lack of diversity in available brands and stores was the main reason for no longer using untact services. In other words, financial consumers want to reduce human contact but also want detailed consulting available through a real person.

Hyundai Card, which is a trend leader in Korea’s credit card industry that’s transitioning to a digital company, in response to these trends became the first Korean financial company to introduce the Watson-based chatbot ‘Buddy’ in 2017. In February of this year, it launched the ‘Real-time credit card issuance service,’ which allows for all processes of card application, issuance, underwriting and usage to be done through a mobile app in real time without the intervention of a human agent. In April, the company introduced the industry’s first ‘AI-ARS’ where an AI agent can provide instant services without any waiting time.

An official at Hyundai Card stated that “the essence of untact financial services does not lie in the fact that they are ‘unmanned.’ The most critical aspect is that we can satisfy customer needs in sophisticated ways by providing better products and services than those delivered by people, leveraging advanced digital technologies such as AI and big data.”

Analysis of Hyundai Card spending data

ㆍ Period of analysis : January 2017 - May 2019
ㆍ Target of analysis : Payment data from 15 major merchants providing untact services

Analysis of Hyundai Card spending data table
Category Services
Transportation Modu Parking, I Parking, Wilson Parking, GS Times
Delivery Baemin, Baedaltong, Yogiyo
convenience stores 711 Signature, Smart GS25, Emart 24 unmanned convenience store
Food & Beverage Starbucks Siren order, Yum sem gim bap
Life conveniences Laundry Go, Wiki box, Zim car
Consumer survey

ㆍ Survey period : Jun 19-20, 2019 (2 days)
ㆍ Survey target : 1,000 consumers aged 20-59

Consumer survey table
Age group Male Female
20~29 150 150
30~39 150 150
40~49 150 150
50~59 50 50

ㆍ Methodology : Mobile survey
ㆍ Surveyed by : Ipsos

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