A decade on from the financial crisis, new research by Equifax reveals a lack of awareness of banking options among Brits.
When presented with a list of digital-only ventures, 60 percent hadn’t heard of brands such as Monzo, Starling, and Revolut. And only 20 percent said they would opt for a new entrant if opening a new account today.
The survey, involving 2,002 people, showed 44 percent of Brits would opt for a traditional bank, and when choosing which brand to bank with, they prioritise good customer service (41 percent), ease of managing money via a good app or online service (34 percent), and availability of a physical branch (32 percent).
Good customer service also topped the list of priorities for people who would choose a challenger bank (31 percent), followed by incentives such as a joining fee (28 percent) and a good app or online service (27 percent).
Friends or family using the bank was the least important factor – just 5 percent of respondents would take this into consideration.
So, it would appear that the challenger revolution has thus far failed to move beyond Shoreditch, that hotbed of FinTech innovation.
Earlier this month, Monzo reported that losses more than quadrupled in its first year with a full license.
Figures for its past financial year show customer deposits were GBP71.2 million (US$91.4 million), equivalent to less than GBP150 (US$198.88) per account.
Although the startup is eyeing one million current accounts by autumn, 80 percent of new customers currently do not deposit their salaries with it.
The government has taken action to increase competition in the sector and progress is being made, but clearly, there’s still a lot of work to do to encourage consumers to fully explore the options available to them.
We’re now six months into the Open Banking ‘revolution’.
Imran Gulamhuseinwala is Trustee of the Open Banking Implementation Entity (OBIE), which was set up by the Competition & Markets Authority (CMA) following an investigation into UK retail banking.
He recently commented: “It’s been a slow but sure start to Open Banking, as expected. We are pleased with the steady pipeline of new entrants to the Open Banking ecosystem and are beginning to see some compelling and innovative propositions develop which will ultimately help customers move, manage and make more of their money.”
“Some heavyweight non-mandated players have already seen and seized the opportunities Open Banking will bring and we are confident this will continue,” he added.
“Looking ahead, we have an intense programme of enhancements planned and we are working closely with the banks to ensure that customer experience and capability are expanded dramatically in the near future. The next release of our standards in September will only accelerate putting customers securely in control of their money.”
In the meantime, if this is ever going to progress beyond a bunch of ‘influencers’ high fiving each other on Twitter, the industry must now work together to increase consumer awareness. Or face accusations of presiding over a huge missed opportunity.