Despite racking up millions of customers in recent years, digital challenger banks are still facing a lack of trust among Brits, most of whom do not even have faith that these new lenders will exist in a years' time, two new reports suggest.
The likes of Monzo, Revolut and Starling have transformed the UK banking market over the last five years, outflanking high street giants and winning fans with their slick mobile interfaces.
Yet analysis by fintech Plum of 450,000 people who have linked their bank accounts to its app via Open Banking shows that many are not using these neobanks as their primary accounts.
More than nine in ten Plum customers are linking traditional high street banks, suggesting challengers still have a way to go before becoming the trusted partner for the majority. Of the 91% that link a traditional bank account to Plum, just two per cent have linked a neobank as their second account.
There is also a gender divide, with women only making up a third of those that do use a neobank as a primary account.
The Plum data also shows that challengers are having limited success in getting their customers to sign up for premium, paying, subscriptions. From all the customers that have Revolut as the primary account with Plum, only 27% are paying for a subscription. For Monzo, it is 10%.
A separate survey from Accenture identifies similar misgivings about the challengers. Just 45% of Brits believe that neobanks will exist in 12 months’ time. Similarly, only 10% place ‘a lot’ of trust in neobanks to look after their data, compared to 41% for traditional banks.
A fifth of UK consumers responded “not at all” when asked if they trusted neobanks to look after their financial wellbeing.
Peter Kirk, UK customer insight and growth practice lead, Accenture, says: "With such low confidence in neobanks’ long-term survival, it’s clear that customers are seeking greater stability and consistency from their existing financial services providers - a flight to safety during the uncertainty of 2020.
"The pressure on banks - both traditional and digital - to meet consumers’ needs for convenience and safety is higher than ever. The challenge is on to create propositions that effectively reconcile the rapid and inevitable shift to digital in ways that feel more personal and relevant.”
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