People’s trust in the banking sector appears to be falling across the globe, while fintechs may be picking up the pieces; according to a new report by global data provider Caliber.
Caliber has found that public support of financial service providers has fallen overall since 2021 – with only 34 per cent of people willing to buy products and services from the world’s largest banks, down from 37 per cent in 2021. Meanwhile, only a third of people worldwide are likely to advocate for, recommend or choose to work for financial services companies – another slight decline from 2021.
But as consumers begin to engage less with their banks than ever before, where does their focus now lie? The findings from Caliber reveal that people view the fintech sector as more trustworthy than the banking sector. It came to the same conclusion in 2021, at which time the gap was actually larger than today in the US.
One possible reason for this attitude may be because, although the traditional banking sector is more widely known, it also has more negative perceptions than fintech. Fifteen per cent of respondents said the banking industry triggered ‘negative associations’, compared to just two per cent who said the same of fintech.
Unsurprisingly, Millennials and Gen Z are much more likely to use fintech products and services than older generations. More than a third of 18 to 24-year-olds prefer fintech/paytech alternatives for online payments and money transfers, indicating that traditional banks should act now to retain younger customers. In the US, Caliber found that the top fintech companies are PayPal, Stripe and Square.
Ethics and access to finance are important to consumers
Shahar Silbershatz, CEO and co-founder of Caliber, discussed the findings: “The data clearly shows that the fintech sector is quickly growing in popularity, especially in the US, and customers are increasingly willing to explore alternatives to traditional financial services. Banks, insurance companies and other financial services providers around the world must heed this trend.”
Caliber’s 2023 Financial Services Reputation Report is based on insights gathered in 2021 and 2023 on the global banking, fintech and insurance sectors. In 2023, Caliber surveyed 10,151 people in seven markets (Brazil, China, France, Germany, Japan, the UK and the US) and more than 4,000 people in Canada and other European markets.
Through this research, Caliber also sought to reveal what drives consumers when choosing a financial services provider. The report reveals that the top issues consumers want the industry to address are ethics, access to finance and responsible investments.
In fact, much of the negative associations with the banking sector come from the sector’s values, fees, complexity and perceived lack of societal contribution.
Silbershatz explained: “The reputation of the financial services industry is largely upheld by perceptions of its services and business conduct, while it struggles with creating interest and connecting with the public on its relevance for society and its values and purpose beyond business services. To address the risk of customer churn, financial institutions must prioritise customer-centric practices and social responsibility.”