Banks losing trust as alternative providers emerge
EY's 2016 Global Consumer Banking Survey shows where banks are lagging, and striding ahead, for their customers.
The Global Banking Survey from Ernst & Young (EY) reveals consumers are becoming less dependent on banks and more excited about alternative providers. The survey of 55,000 consumers from nine countries, including Australia, showed that 40% have decreased dependence on banks as well as increased excitement about the alternative financial providers that are now available.
Trust was also a key issue for consumers. In Australia, 51% trusted banks to keep their money safe, while only 20% trusted banks to provide them unbiased advice. This compares to 48% of consumers globally that trusted banks with their money and 26% of global consumers that thought banks provided them with unbiased advice.
This survey comes as politicians are calling for a royal commission into banking following an outcry over excessive credit card surcharge fees and the failure of banks to pass on the full cash rate drop.
More attractive rates and fees were ranked as the most important for consumers considering a digital-only, non-bank provider. This may have to do with fintech providers having a growing presence in a diverse number of financial sectors, including business loans and insurance.
While a great digital presence was favoured by 66% of consumers globally, 60% still value a physical presence from their bank. The numbers were even more split in Australia, with 56% of Australians valuing a great digital presence compared to 55% placing importance on a physical presence. Globally, 44% of consumers would not trust a bank without branches.
Based on these numbers, EY suggested that closing bank branches rapidly may need a rethink.
"While branch networks do need to be progressively decommissioned in order to address cost challenges and compensate for the rising cost of digital, we foresee a future where branches function differently and assume new formats, such as digital channels with a physical presence or micro-branches in high-traffic locations," the report said.
In Australia, we are still divided when it comes to alternative providers; 51% have used or are considering using non-banks compared to 61% worldwide. While new platforms, services and innovations are being introduced by new and traditional financial service providers, consumers are evidently still weighing up their options.