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A recent survey points to an increase in trust among consumers for banks, both neo and incumbent. Why?
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Weekly Leading Article
The pandemic has wrought many surprising changes. Could rising trust in banking be one of them?
AltFi recently polled, with the help of Opinium, c.2000 UK adults as to their attitudes to financial services. One notable trend was an apparent rising trust in banks. This was notable with the trend observable in both neobanks such as Monzo, Starling and Revolut and incumbent names such as HSBC and Lloyds.
Overall nearly two-thirds (64 per cent) said they trust large banks such as HSBC and Lloyds to keep their money safe, an increase from 57 per cent in 2020.
While markedly lower for neobanks, newer digital players did also see an increase in levels of trust to keep cash safe. Almost exactly one third (33 per cent) said so, up from 29 per cent one year ago.
As we have previously written about before, trust is easily lost and hard won. So what exactly might have prompted a rising tide?
By and large, it seems likely to be connected to the solid performance of banks during the pandemic. There have not been any bank runs, collapses or government bailouts. Contagion in the real economy doesn’t yet seem to have eroded bank balance sheets.
In addition, most banks have shown themselves to be highly adaptable to new challenges such as working from home, lending in unchartered credit territories and experiencing a forced acceleration of the digitalisation process in the case of incumbents.
It might also be the greater competition in the marketplace. With more players competing to own the customer, banks are more overtly trying to prove they have empathy with the consumers they serve. Consumers know they can move more easily.
The jubilant numbers need a pinch of salt though. Nearly half the number of people surveyed trusted fintech banks than high street incumbents. That is a startling statistic and one that must keep neobank leaders up at night.
Let’s hope it doesn’t require an even more serious global catastrophe to boost the numbers to something close to parity.
The AltFi Leader is a new weekly view for 2021 from our editorial team. We’d love to hear your ideas, thoughts, feedback and constructive criticism: email@example.com