Payments and technology firms are increasingly challenging traditional banks as growing number of consumers are using these non-financial providers for essential activities such as paying bills, transferring money, and taking out loans, according to a survey by Fiserv.
The study found 88% of the respondent comfortable paying bills through a bank or credit union, 52% through a payments company, 40% through a technology company, and 16% through a social company.
In case of loans, 82% were found comfortable taking them from a bank or credit union, 32% from a payments company, 29% from a technology firm, and 14% from a social company.
The study also found half of the consumers using a voice-activated device feature within the past year, and 26% using it to carry out a banking function within the past 30 days.
Younger, wealthy, and urban consumers were found to be more likely to use non-financial providers for conducting financial activities. In this regard, 65% of millennials were found comfortable with a payments company and 63% with a technology company, as against 26% and 24%, respectively, of non-millennials.
In spite of rising adoption of alternative banking channels, 90% of millennials said referred national bank, credit union, community bank, or regional provider as their primary financial provider.
Fiserv COO Mark Ernst said: “Technology and payments companies may give banks and credit unions a run for the money as consumers become comfortable using these companies for financial activities, an undeniable signal for financial institutions to take note.
“It’s critical that financial institutions think of themselves as technology providers in order to capture the opportunity to expand upon existing customer relationships and meet the demand for fast, convenient solutions that make people’s lives easier.”