The younger generation trusts Paypal more than banks

Banks are bleeding customers. Here's how to win them back.
6 June 2018 | 953 Shares

Peter Thiel (right) founded Paypal 20 years ago. Source: AFP

Young people trust tech giants like Amazon and PayPal more than banks to hold their personal data.

A survey by the RFi Group found that 18-24-year-olds in the UK feel that their personal information is more secure with tech companies than with banks.

“Consumer behavior will continue to be dictated by who they trust and distrust. Traditional banks should be thinking specifically about what those brands have done to earn consumer trust,” said Charles Green, CEO of RFi Group.

The report shows younger customers increasingly prefer to use Amazon and PayPal, especially for payments. On the other end of the scale is Facebook, where 77 percent of UK consumers stated their distrust.

This shows that customers are willing to use services by certain brands as long as the companies maintain their track record.

In Facebook’s case, the Cambridge Analytica data breach highlighted its failures, causing customers to lose faith in the tech giant.

Incidentally, customers also reported being more comfortable sharing data with Visa and Mastercard than with the banks they partner with.

This shows that consumers still trust brands with significant brand presence and longevity.

“At an overall consumer level, from a trust-scale point of view, banks are in the lead by a small margin. However, PayPal, Amazon and the card schemes are very close behind and are winning for younger millennials,” elaborated Green.

Having said that, most users are generally happy with additional services by the banks.

Unlike a lot of disruption in financial services to date, which has been focused on existing pain points for consumers, the findings show that the biggest opportunities are in new value-added services.

Seven in 10 UK consumers said that they find their everyday banking services very easy to use and 91 percent said they were satisfied or very satisfied with their current digital or mobile banking offering.

“Ultimately, the biggest opportunity is not going to arise purely from harnessing dissatisfaction, it is going to be in the offering of new and compelling market propositions,” Green advised.

Green suggests banks explore opportunities in simplifying product applications and providing value-added services in specific banking tasks.

He observes that consumers are looking for services to help move money more easily between accounts of different providers. There is also a demand for services to help avoid fees, as well as in budgeting and financial management.