Lack of trust hindering challenger bank growth – new research


INSIGHT
Published
Nov 22nd '19
Share
Facebook

UK growth in so-called ‘challenger’ banks is being held back by a lack of trust, research out this week has shown.

 

Research by technology firm Fujitsu found that while challenger banks have ‘all the ingredients for success’, the ‘public’s trust in technology is a significant barrier to widespread adoption’.

 

The findings came from a survey carried out by Fujitsu for its report, Technology and the New Banking Customer. 2000 British consumers were surveyed for the report.

 

Why don’t customers trust new banks?

77% of those surveyed currently bank with a traditional bank, while 67% say they are more likely to do business with banks that have branches on the high street.

 

The research found that 40% of people don’t trust challenger banks at all. 54% are concerned about the safety of their data, with 49% admitting that concerns about data security underpin their expectation not to adopt more digital banking services in the future.

 

Banks are increasingly adopting new technologies like biometrics to support their digital banking projects. This is not a panacea for people’s concerns, though; while 46% say that this technology would make them more likely to use a bank, 24% would see it as a deterrent.

 

There is also a generational divide when it comes to attitudes towards digital banking. Half of 25-34-year-olds claimed to be excited about mobile banking, but just 20% of those over 55 said the same.

 

Banks are adopting new technologies – but are they being welcomed?

In our blog of February this year, exploring what the UK’s financial sector looks like today, also noted that ‘Innovative solutions have furthered competition, enabling new entrants to disrupt the financial services sector by competing with incumbent firms’.

 

And our recent blog examining digital transformation in the finance industry noted that ‘the impact of digital transformation and automation leads to opportunities of faster, cost-effective operations, meeting regulatory deadlines, improved employee and customer experience and remaining competitive’.

 

With growing numbers of new competitors driving choice and innovation, innovation is something increasing numbers of banks are pursuing.

 

But as this new survey shows, it’s not all positive news.

 

Launching the report, Fujitsu’s Ketan Parekh said that while ‘Technology has taken banking by storm…public trust, above all other reasons, is what’s impacting the financial services sector, and holding back challenger banks from becoming mainstream.’

 

Adopt new technologies in a compliant way

If banks can evidence that their digital transformation projects meet with regulatory requirements, they may have more success in attracting and winning the trust of consumers.

 

 

As Fujitsu’s Parekh says: ‘To be successful, traditional and challenger banks need to educate the public about the benefits of new technologies in financial services, and build a relationship based on trust.’

 

Adopting trustworthy technologies – technologies adopted in line with regulatory requirements – will increase trust, and willingness to invest, in challenger banks.

 

How can we help!

At LS Consultancy, we offer a number of distinct products and services which can be deployed individually or combined to form a broader solution.

 

When you face business or regulatory challenges, we can provide solutions that are tailor-made to your needs with a view to releasing your energies to focus on your clients.

 

We work both within individual teams and across many departments to offer a complete solution, with a range of cost effective, compliance and marketing solutions including copy advice which are uniquely suited to supporting firms.

 

Explore our full range today.

 

Contact us

 

FOLLOW US

Connect with us via social media and drop us a message from there. We’d love to hear from you and discuss how we can help.

 

Facebook  Instagram  LinkedIn  Twitter