The UK is fertile ground for the fintech industry. As one of the world’s major financial centres – and a burgeoning technological hub – Britain is becoming a key focus for talent and investment alike. The country is home to some of the most recognised companies in the sector: Monzo, Nutmeg, Funding Circle, and others were launched here, and other companies such as Wealthsimple have expanded into this increasingly lucrative market. Valuations are soaring, and more capital is being injected into the local fintech industry than in China or the US.
But for all its recent successes, the general public remains wary about this new sector.
To understand what is driving this suspicion, we surveyed 2000 UK consumers. This has helped us identify the extent to which consumers have fintech trust issues and investigate the factors (from the fintech media to friends and family) that influence their view of fintech companies.
Better the devil you know?
Bank scandals have become a regular fixture of the financial calendar. From the sub-prime mortgage bubble that led to the 2008 recession to last year’s allegations that RBS’ restructuring unit was pushing SMEs into bankruptcy; the sector’s major institutions have endured reputational hit after reputational hit.
Despite these scandals, implicated institutions are still standing: our survey revealed that consumers continue to trust traditional banks. A minority of consumers, just under 14%, resent their current bank – with the most-cited reason being low-interest rates (32.79%). The second biggest complaint is inconvenient opening hours (29.78%). Major brands in the sector such as Barclays, Santander, NatWest and Lloyds still enjoy the confidence of over 60% of customers.
Surprisingly, trust in these institutions is lower amongst the older demographic cohort than among young people. Barclays, for example, is trusted by 73.57% of 18-24-year-olds – in contrast to only 53.06% of respondents aged 65+. However, unsurprisingly, younger people tend to have more confidence in mobile-only banks such as Revolut and Monzo. Among 18-24s each is trusted by 25.5% and 24.15% respectively – which declines to 14.06% and 14.82% among over-65s. There are also key location-based variations: in London, Revolut and Monzo are trusted by 34.99% and 38.86% of consumers respectively – almost double the nationwide average.
Overall, however, fintech companies have nowhere near the level of consumer trust that conventional banks do. Banks may annoy and even infuriate customers, but many are choosing the devil they know.
An absence of trust in fintech companies may be explained by a corresponding absence of awareness around the term: Just 18.08% of men are aware of what fintech is – a figure that drops to 7.5% among women. Awareness of particular fintech companies is also lower across the board for women. From a range of fintechs, only PayPal achieved parity among male and female respondents.
As for those who trust digital banking and finance companies less than traditional institutions (41.37%), the main reasons cited are a lack of understanding (27.22%) and an absence of physical branches to go to for in-person assistance and service (22.13%). The latter point is particularly important to young people, who rate it as their primary concern when it comes to considering mobile only bank accounts for their salaries – while older people are more concerned about security and the risk of cyber-attacks. In disrupting the industry, these companies may be eschewing some of the things that consumers value most – even as they provide newer and more innovative services.
As for these services, 33.45% of those surveyed claimed they would be most likely to use new digital banking and finance companies for current accounts, with services such as international transfers (12.30%), cryptocurrency trading (7.47%), and wealth management (5.06%) coming in significantly lower.
Location, location, location
Continent of origin also plays an important role in determining levels of trust among UK consumers. Some 56.8% of those surveyed claim they’d be most likely to use the services of a fintech company if it was headquartered in Western Europe. North America came in second, with 14.3%.
Meanwhile, the least trusted continents were South America (2.95%) and Africa (2.3%).
Building fintech trust
Across demographics, genders, and locations, people are still more suspicious of fintech companies than not. This stems from a lack of awareness, a lack of trust, and a lack of understanding. Conventional banks may have problems, but there’s clearly a level of comfort to be found in the familiar – even when the familiar is scandal-prone and technologically lacking.
Fintechs may have achieved acclaim for their unconventional offerings, but for consumers, conventional services still hold the most appeal. To enhance their reputations and gain good ground in the market in the long run, fintechs must work to change this dynamic.