UK consumers are worried about the long-term survival of digital challenger banks, according to a new report.
Accenture’s Global Banking Study reveals 45 per cent of consumers believed that neobanks would exist in 12 months’ time. Additionally, just a tenth placed “a lot” of trust in the fintechs to look after their data, compared to 41 per cent for traditional banks.
Most worryingly for the UK’s fintechs, 20 per cent responded “not at all” when asked if they trusted neobanks to look after their financial wellbeing.
Digital challengers like Monzo and Revolut have introduced new features this year to convince customers to claw back some of their losses.
Revolut more than tripled its losses from 2018 in its annual report released in August. Although the neobank saw a rise in its customer base during the first lockdown, it saw a decline in interchange revenue, which makes up over 60 per cent of its income.
Monzo reported losses had more than doubled to £113.8m last year.
When asked the main reasons why consumers would not bank with a challenger book, half said they were happy with their current provider, while 42 per cent said they were unfamiliar with what they offer.
Accenture’s report also reveals that the significant uptick in the use of digital banking, which has removed in-person branch interactions, has eroded consumer trust.
Accenture’s figures show less than a third – 30 per cent – of UK consumers trust banks to look after their long-term financial wellbeing, compared with 44 per cent two years ago.
“This mass acceleration to digital is a double-edged sword for banks, said Peter Kirk, Accenture’s UK customer insight and growth practice lead. “While the necessary digitalisation of their services has helped them to support customers throughout the pandemic, it has all but removed the vital human element from banking.”
It has forced groups of people that tend to rely on face to face banking, notably the elderly, which has had an additional impact on trust and the overall experience.