Start-ups and fintechs are gathering customers at a pace. But if they switch, would they ever switch back? It depends on what’s offered. Banks vs fintechs is the battle in the financial services sector right now.
Monzo in the UK currently has more than two and a half million users. Starling has well over 500,000 in its customer numbers. According to Revolut’s website, it has more than six million customers worldwide. Now that consumers are using these new options, what hope do old, dusty incumbents have?
Apparently, the giant behemoth banks with years of legacy are not out of the running yet.
Banks vs fintechs
The majority of fintech customers (66%) would be happy to use a traditional bank. However, this depends if it offers similar propositions and pricing as neobank rivals.
Trust is also there. According to management consultancy Oliver Wyman, trust in traditional banks and insurers is fairly high at 60% on average. This suggests that customers leaving the old guard and never coming back is not a foregone conclusion.
However, it does depend on the region. Germany (71%) and the UK (69%) trust traditional banks the most. France is at 58% with Spain at 56%, but in Italy, less than half (48%) trust traditional financial service providers.
However, Italians would be the most likely to move back. 80% of Italian respondents said they would move back to a traditional provider if the proposition and pricing was right. The French (58%) were the least likely to do so. The UK is near the average (65%) and is followed by Spain (62%) and Germany (60%).
Simon Low, Partner and Head of EMEA, Retail and Business Banking at Oliver Wyman, says: “Our survey reveals that traditional banks are well placed to re-capture customers who have switched to neo-providers. By capitalising on high levels of consumer trust, they have the opportunity to gain market share by developing the right digital offering.”
Fady Khayatt, Insurance Partner at Oliver Wyman, adds: “Flexibility, price and speed of obtaining insurance coverage are the main reasons customers consider new digital insurance propositions and our surveys shows that many customers remain underinsured. However, insurtech propositions to date remain relatively niche and traditional insurers are well placed to provide new services to retain and capture customers who are interested in new propositions.”
The claim that customers, having moved once, will never be seen again is farcical. Customers are much more price conscious and savvy than they are given credit for. If providing the right offers and services, customers will flood back. The fact that they are leaving means the incumbents are lacking in this aspect.
Banks vs fintechs is not a battle that will end anytime soon. However, what must be understood is that the power is not with the firms, but with the customers.