This week, consumer insight agency, Strive Insight, launches new research into attitudes towards the financial technology (Fintech) sector called ‘The Future of Fintech – A Consumer Perspective.’
The research found that 69% of consumers asked said they would consider a new financial product if it offers a clear benefit whereas 90% felt uncomfortable with Fintech third parties accessing their data.
This research is one of the UK’s largest consumer studies on the future of Fintech banking to be released since global venture capital investment in this sector doubled in two years from $6.7m p.a. in 2014 to $13.6m p.a. in 2016.
The new study encompasses both qualitative and quantitative research with a sample of 1,000 quantitative online interviews (among 18-55s that manage their finances online) as well as a series of immersive, 90 minute interviews conducted with consumers drawn from a range of ages, incomes and with a range of technology usage. In combination, this two-tiered approach gives a solid picture of the key consumer issues facing the Fintech sector.
Strive Insight’s research revealed four main challenges that Fintech providers need to solve before the sector can grow to match the fast-pace of innovation and investment in recent years.
These challenges are:
Overcoming inertia towards change in the financial services market. Delivering tangible benefits to meet high consumer expectations. Removing consumer fear and the mystery that surrounds Fintech technology.
Creating consumer trust in the brands within the Fintech sector.The research found that consumers agree that technology is the conduit for long overdue change in Financial Services but they’re not yet fully embracing solutions that are currently available.
88% agree that technology improvements will help providers offer better products but only 53% are using their bank’s mobile app. Consumers do not universally accept the benefits of AI over face-to-face advice.
83% of early adopters agree artificial intelligence will streamline the way they interact with their bank.However, amongst the general population 76% believe that artificial intelligence advice will never be better than advice from a qualified professional. Concerns about data security present a real challenge for open banking in the UK.
Only 19% of consumers strongly agree with the statement ‘I know how tech companies are using my data to improve products and services.’
Consequently, 90% feel uncomfortable about third parties accessing their data to build new products and services. While the banks currently hold the advantage in Financial Services this could be under threat with consumers open minded about trialing new digital providers.
69% will consider a new financial product if it offers a clear benefit, regardless of who is offering it.
65% agree banks (rather than new digital providers) are the most likely to offer high quality financial advice. BUT 41% agreed with the statement that the big banks won’t exist in 20 years’ time.
In conclusion, while technology will no doubt disrupt the financial services market, wide adoption of new Fintech services and providers is likely to be more gradual. At present, we see a stark contrast between an industry moving at pace and consumers preferring the safety of what they know, hence, we believe change will happen but not at the pace anticipated by many. The good news is that traditional and new providers are already collaborating and this co-operation will help to build the adoption of Fintech services among consumers.
Mark Yeomans, co-owner of Strive Insight said of the new research: “This is an incredibly interesting time to be involved in the financial services sector with exciting developments in Fintech opening new doors. Consumers are wary of change and providers will need to not only give them a reason to engage but will also need to develop a deep understanding of the consumer mindset if they are to succeed”
“We believe this research offers a fresh insight into consumer behaviour and attitudes around banking and in particular towards their current and projected uptake of app-only bank services, pros and cons of switching banks, issues around data security and the future of high street banks.”
Stefan Drechsel, former Insight Manager at Barclaycard UK said: “For providers who want to succeed in Fintech the consumer perspective is absolutely vital, regardless of whether you are a traditional player or a new entrant. Financial services is typified by inertia and consumers are nervous about change, so providers need to provide tangible benefits and ensure that consumers understand and are comfortable with what they are being offered. When developing disruptive propositions, providers can’t just second guess what will be needed, which is why consumer research will be important in developing the right offers and bringing them to market the right way.”