Majority of US consumers believe banks will cease to exist within their lifetime
18 October 2016 | 6019 views | 0
Source: Blumberg Capital
Three of five Americans believe that their banks are failing to keep up with their needs in today's connected world, leading many to wonder if traditional financial institutions will disappear and what kinds of financial technology (FinTech) companies will emerge to take their place.
As it turns out, the majority (57%) believe that traditional financial institutions as we know them will cease to exist within their lifetime while nearly 70% believe that it's FinTech solutions that are making their lives and financial health better. Blumberg Capital, a San Francisco based early-stage venture capital firm, today released findings that paint a tumultuous future for traditional financial institutions that aren't embracing new technology as more and more Americans migrate toward the innovative products and services offered by emerging FinTech companies.
FinTech Now the Norm
Conducted in association with Regina Corso Consulting, the national survey asked American adults what they thought about traditional banking institutions, FinTech companies and new financial technologies. At a high level, the survey found that not only do three in five Americans have a positive view of FinTech, but nearly 75 percent agree that FinTech provides consumers with more power over their finances. Additionally, the survey revealed:
70% of Americans believe that new solutions such as digital banking, online lending, payments and financial services, are making financial transactions easier than ever.
65% of Americans agree that FinTech levels the playing field by providing access to services previously only available to the wealthy.
69% of Americans think the latest tech for financial tools will help everyone be better off financially.
57% percent of Americans are under the belief that traditional banks as they know them will cease to exist within their lifetime.
"Between the negative headlines and American's general distrust of large financial institutions, banking as we know it must and will change," said David Blumberg, founder and managing partner of Blumberg Capital. "While no one knows what will happen in the banking business over the next 20 years - it's clear that more Americans are increasingly dissatisfied and are excited to embrace new technologies. At Blumberg Capital we believe in this change and that is why we partner with forward thinking banks and invest in the companies at the center of the FinTech revolution. These banks and companies are providing consumers and small businesses access to new financial products and services that are helping save money, make smarter decisions and operate more efficiently."
Where Traditional Financial Institutions Fail -- "are no longer meeting the needs'"
Respondents overwhelmingly believe that traditional financial institutions should focus more on the average consumer and small businesses. Findings revealed that most Americans want access to flexible borrowing options, think that current traditional financial institutions charge too much interest on debt and believe that the "underbanked" need access to better financial services options. Other findings include:
62% of Americans feel they pay way too much interest on debt.
74% of Americans agree that it would be helpful if there was an automated and customized way to make sure they never miss a payment and always minimize the total interest expense on their loans.
80% of Americans agree that financial institutions need to focus more on helping the average consumers and small business owners rather than the top 1% and big business.
79% of Americans stated that they want access to flexible borrowing options that minimize their interest payments.
59% of Americans said they would borrow from or loan money to a friend or family member to grow a small business if it meant paying less interest to banks.
76% of Americans believe that financially underserved people such as those with low FICO scores or bad employment histories need access to options for loans/credits outside of traditional banks.
FinTech Growing Pains
While signs are pointing to a financial technology revolution, there are still some major challenges that are preventing wider adoption of FinTech services. These include a lack of awareness in some communities as well as concerns over security and privacy. The survey revealed the following:
30% of Americans surveyed are not at all sure how they feel about FinTech, with lower income households being more likely to state this than higher income households
72% of Americans listed security as something they worry about with the new banking services online and they are not completely confident their financial information is secure or private
65% of Americans listed security as the main priority when considering features in a financial institution.
For a complete look at the survey findings, click here.
This online survey was conducted by Regina Corso Consulting on behalf of Blumberg Capital between September 6 and 7, 2016 among 2,036 U.S. adults, aged 18 and older. Figures for age, gender, education, income, employment and region were weighted to bring them into line with their actual proportions in the population. Because the sample is based on those who agreed to participate, no estimates of sampling error can be calculated.