A recent Fujitsu report has found that 40% of the British public do not trust challenger banks thus making the UK one of the most conservative European countries in regards to banking.
The study, which also took place in Germany, Spain, Republic of Ireland and the Nordics, also discovered that 77% of the British public only bank with traditional banks and that 54% of the public is worried that the technology adopted by challenger banks puts their personal data at risk.
Ketan Parekh, Head of Financial and Insurance Services at Fujitsu, stated: “Technology has taken banking by storm. The research shows that public trust, above all other reasons, is what’s impacting the financial services sector, and holding back challenger banks from becoming mainstream.
“Whilst banking with a challenger is now seen as a ‘nice to have’, with more people enjoying the speed and convenience of digital banking, challenger banks need to find a way to convince people that they are trustworthy enough to handle their monthly incomes and other major financial transactions.
“What we are finding is that many customers still want the security of a physical branch, and although speed is important, human interaction has not yet been replaced by the convenience of technology.”
Moreover, the report revealed that 49% of the British public admitted they would halt using digital banking services due to the technological data concerns.
Despite the concerns around safety, 26% of customers prioritised speedier transactions and transfers. This, combined with the fact that 33% of those surveyed stated they enjoy the quickness attributed to challenger banks, shows that delivery speed is allowing challengers to attract and retain customers.
Jouk Pleiter, CEO of Backbase, believes that challengers should continue on the path of innovation as the number of users in general is on the increase.
He elaborated: “By 2024, 48% of customers will bank only with traditional banks – a dramatic drop from the 68% this year.
“As challengers such as Revolut and Monzo thrive, innovating in similar fashion is no longer something to ponder – it is something to implement at the very minimum in order to retain your customer base.
“Banks must adopt a digital-first internal mindset, enabling them to act more and plan less. This ensures quick and more frequent engagement with customers, placing them at the very centre of their strategy.”
Parekh continued by discussing how certain customers may always prefer the security that comes with a traditional bank and stated the importance of finding balance between innovation and meeting the expectations of their customers.
He concluded: “While bank branches still have a place in the financial lives of Brits, there is certainly an appetite among consumers for technology and enhanced experiences. But for banks to be confident in adopting technology that will benefit their customers, they should be honest and ethical in their operations.
“Ultimately, to innovate, both traditional and challenger banks need the blessing of the public, and this is what unites them. 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.”