Britain’s challenger banks are outperforming incumbents when it comes to overall customer satisfaction, according to research from vendor FIS.
In a survey of more than 1000 Brits, 76% of digital-first direct bank customers say they are ‘very satisfied’ with their banking relationships, compared to 69% of those who bank with one of the top 50 global banks.
These challengers also outperform established high street banks on key performance metrics including privacy, security, problem solving and real-time payments. However, incumbent banks outdo their upstart rivals when it comes to providing easy-to-use digital payments - the payment mode of preference for younger consumers.
All generations except baby boomers turn to their mobile phones first when interacting with their bank; more than desktop PCs, ATMs or bank branches. This trend is led by young millennials, with 76% of digital bank interactions conducted via mobile, while only 21% prefer desktops and laptops. For baby boomers, or those over the age of 53 however, desktops and laptops remain the preferred channel at 66%.
Overall, just one in five consumers surveyed had heard of the term ‘open banking’, with little generational difference. When defined, 55% say they believe the potential risks outweigh the potential benefits of open banking, with just 10% believing benefits outweigh risks, and 35% unsure.
Bruce Jennings, strategic development director, FIS, says: "This year’s Pace findings show just how competitive the UK market has become. Consumers are demanding ever-more consistent and convenient banking experiences, and it’s the mobile interface - not physical locations or even personnel - that are now the face of a bank.
"This presents a clear advantage for the digital-first challenger banks that have entered the market in the wake of PSD2. For long-established banks, open banking provides an opportunity to leverage consumers’ favourable views of their security protocols and engage the right technology partners to add the ancillary products and services customers want.
"However they must first complete the long-avoided digital transformation to ensure they can effectively serve today’s customers and maintain their market dominance."