A recent analysis by global data supplier Caliber reveals a decline in trust towards the banking industry worldwide, with fintech companies potentially filling the void.
According to a recent analysis by global data supplier Caliber, trust in the banking industry looks to be declining everywhere, with fintechs possibly picking up the pieces.
According to Caliber, public support for financial service providers has decreased generally since 2021, with only 34% of people now wanting to use the world’s top banks for goods and services, down from 37% in 2021. Another modest fall from 2021, barely a third of people worldwide are predicted to support, advise, or decide to work for financial services organizations.
Where does their attention now lay, though, as customers interact with their banks less frequently than ever before? According to Caliber’s research, consumers trust the fintech industry more than the banking industry. In 2021, when the disparity was much wider than it is now in the US, the same result was reached.
This mindset may be caused, in part, by the fact that, despite traditional banking’s greater visibility, it also receives more unfavorable press than fintech. Only 2% of respondents stated the same of fintech, compared to 15% who claimed the banking sector sparked “negative associations.”
Unsurprisingly, Gen Z and Millennials are far more likely than older generations to use fintech goods and services. For online payments and money transfers, more than a third of people between the ages of 18 and 24 prefer fintech/paytech alternatives. This suggests that traditional banks should take immediate action to keep young consumers. The top three fintech firms in the US, according to Caliber, are PayPal, Stripe, and Square.
For consumers, access to finance and ethics are vital
The findings were presented by Shahar Silbershatz, CEO and co-founder of Caliber: “The data clearly reveals that the fintech sector is swiftly gaining popularity, especially in the US, and clients are increasingly eager to seek alternatives to traditional financial services. This tendency needs to be taken into consideration by banks, insurance firms, and other financial service providers worldwide.
The worldwide banking, fintech, and insurance sectors were the focus of Caliber’s 2021 and 2023 financial services reputation report. Caliber questioned 10,151 people in 2023, including more than 4,000 in Canada and other European regions, in seven markets (Brazil, China, France, Germany, Japan, the UK, and the US).
Caliber’s goal in conducting this study was to shed light on the factors that influence consumer choice of a financial services provider. The survey finds that ethics, financial access, and ethical investing are the top issues that consumers want the industry to address.
In actuality, the values, costs, complexity, and perceived lack of societal contribution of the banking industry account for a large portion of the unfavorable connections with it.
According to Silbershatz, “the financial services industry struggles to generate interest and connect with the public on its importance for society and its values and purpose beyond business services. The reputation of the industry is largely supported by perceptions of its services and business conduct. Financial institutions must prioritize client-centric processes and social responsibility if they want to reduce the risk of customer attrition.