Half of American’s prefer to use a traditional financial institution, but also seek the benefits of new technologies and services. What’s more, more than two-thirds of Americans would trust new payment or investment technologies more readily, if they were offered by their existing bank.
These statistics were recently revealed in a survey conducted by Blumberg Capital, a San Francisco-based venture capital firm (and one of Trulioo’s investors).
The research, conducted in association with Regina Corso Consulting, examined the attitudes of American consumers toward traditional banking institutions, fintech startups and new financial technologies. It also highlighted the global sentiment that traditional financial institutions need to work harder to keep pace with innovation, and the needs of their consumers.
Over half of all American’s surveyed (57 percent) said they had a positive view of fintech companies, and the same number reported that they felt the days of going into a physical bank were numbered – on par with last year’s survey findings. Half of Americans said they believed there needed to be a mix of financial services – old and new. They want traditional banking services, but also desire the benefits associated with new technologies.
While innovation is the key to longevity, many people surveyed were concerned with the security and privacy of their information. Fifty-one percent said they were not confident that their chosen financial institution kept their information secure or private. And the move to digital is causing even more apprehension, with 76 percent reporting security was a concern when it came to new online banking and payment services – up from 72 percent in the 2016 survey.
“Previously, in the financial industry, capital, reputational trust and regulations were the only barriers to entry,” said David Blumberg, founder and managing partner of Blumberg Capital. “Technology is changing the game. Large financial institutions need to build or buy innovation to maintain and extend their leadership positions. As consumers demand the new technologies, we will see increased adoption or acquisition of fintech by banks to serve consumers. In addition, the fintech revolution is expanding the market, thereby positioning some pure play fintech startups to become large financial institutions of the future.”
As for what’s ahead, four in five Americans agreed that financial institutions needed to focus more on helping the average consumer and small business owners, rather than big business. Just over half agreed that traditional financial institutions were not evolving fast enough to keep up with consumer needs and expectations.
According to the survey, American’s attitudes towards fintech have stayed relatively consistent year-on-year. However, there is an apparent generational divide; while older generations are keeping the traditional banks alive, Millennials and Gen Xers are looking towards newer technologies. This echoes the global move towards digital solutions and a mobile-first economy – from ordering an Uber or booking an AirBnB, to making a same-day purchase on Amazon.
“Fintech and the rise of the micro-merchant economy are revolutionizing the delivery of financial services and advancing financial inclusion, through an evolving digital marketplace and the push towards an inclusive, mobile-first society,” said Stephen Ufford, CEO of Trulioo.
While an everyday consumer may be wary of the move from traditional banking to fintech, many people are beginning to see that the potential benefits of these new technologies outweighs the associated concerns.In short, while the call for newer, faster and more efficient financial technologies is getting louder – for fintech startups to thrive, they need to provide a service that is better than what already exists. In that same vein, if banks don’t embrace innovation and experiment with new technologies, they risk becoming obsolete.
“Given the rapid growth and adoption, we recognize the need for regulatory technology (RegTech) solutions to increase trust and safety online, by powering fraud prevention and compliance systems for payment providers, eCommerce merchants, financial service providers, online gaming and online marketplaces,” Ufford continued.
“RegTech automates compliance processes, making systems more efficient and cost-effective – a win for businesses and consumers.”