New research from TransUnion has revealed that the gap between traditional high street banks and digital challengers is rapidly closing.
According to TransUnion’s latest Consumer Credit 2020 report, digital-only banks are only 3% behind their high street counterparts when it comes to consumer intent for current account applications. 10% of consumers said they plan on applying for a current account with an online or app-only bank in 2020, compared to 13% who intend to apply to high street banks.
This is particularly true for younger generations, where the intention to apply to a digital-only bank is almost three times greater for consumers aged 44 or younger, compared to those aged 45 and upwards.
Satrajit “Satty” Saha, CEO of TransUnion in the UK, comments: “Digital-led and digital-only platforms – including fintechs and solutions from big tech companies – are now closing the gap with traditional providers as they continue to secure their position in the finance and payments markets.
“These new challengers are proving popular with consumers seeking competitive and tailored product offerings, with faster, more personalised service and speedy decisions. For now, traditional banks still enjoy the highest level of trust in the market; a key driver when it comes to choosing a finance provider, but digitally-led alternatives are steadily catching up. According to our research, 81% of consumers trust high street banks, whilst online or app-only banks came in second at 57%.”
However, the report suggests that consumers are primarily using the new fintechs to complement or augment the financial products they already have with traditional providers, particularly with the likes of loans and credit cards, where they now have more choice than ever before.
“The rise of online options is giving customers more choice, which is really positive, but with this comes a need for better education and financial literacy,” explains Kelli Fielding, managing director of consumer interactive at TransUnion in the UK. “Lenders across the market need to be using the tools available to engage with and empower their customers. This will enable them to build trust whilst also ensuring consumers have the information needed to make informed decisions.”