State of the Industry: traditional banks vs. fintechs

Key insights

• Consumers are using both traditional banks and fintechs: Almost all consumers in our study currently do business with both traditional banking and fintechs, citing benefits and drawbacks with each and workarounds that might be fulfilled by either a traditional bank or fintech. 

• Ever-changing interest rates were a hot-button topic for most consumers

• Consumer trust came up often: Trust was naturally a frequent topic, with industry prominence, longevity and sustainability, fee transparency, and quick access to real humans to resolve issues or help with questions were key factors influencing trust for both traditional banks and fintechs.

How banking is changing for consumers

Consumers are noticing an increased digital presence by both traditional banks and fintechs—and most prefer that the industry continue moving in this direction.

Traditional banks

• Bank locations are closing

• Long lines at branches, longer call wait times

• Increased digital presence and improved online banking and app experiences

Fintechs

• Declining interest rates, particularly on high-yield accounts

• Increased prevalence of fintechs and fintech services leading to increased consumer familiarity

• Convenience (e.g., opening accounts, transferring money, creating centralized bill-pay arrangements)

How to improve the trustworthiness of traditional banks vs. fintechs

For the most part, consumers trust traditional banks and fintechs alike, noting few concerns about the increased digitization of financial services. Consumers are more concerned about the future of banking and how any changes to the industry might impact their personal finances, the security of their funds, and other business practices that affect consumers (e.g., institutional fees and regulatory transparencies).
 

Improving trust for traditional banks

• Fee transparency: Consumers are dissatisfied with surprise fees from traditional banks while others question the intention of banking fees altogether

• Business transparency: Because traditional banks are often viewed as big business entities, some consumers want insight into what banks do with their money, what the institution’s values are and how profits are rolled into these values, and what banks would do to prepare for a recession and how they’d manage consumer savings and investments during such an economic crisis (i.e., would they consistently provide updates).

• Personalization: Consumers value personalized financial services that support, advise, inform, and educate them on how to make smart financial decisions.

Hear what consumers recommend to improve trust with traditional banks

Improving trust for fintechs

• Combination of branch/digital banking experience: Most consumers prefer some level of real-person customer support to the fintech industry’s increasing reliance on digital touchpoints, which these participants said removes the personable and more trusted experience of being able to do business in person (as at a traditional bank).

• More communication about fund security: Consumers are unsure of the regulations around fintechs and want more communication around financial and cybersecurity.

• More certainty around the longevity of fintechs: Consumers align longevity and rapport with trust. Since the fintech industry is fairly new, many are waiting to see if and how the fintech industry can weather financial hardships and recessions.

Hear what consumers recommend to improve trust with fintechs