Bank customers are quickly adapting to an unprecedented reliance on FinTech apps and other digital services to take care of their finances as social distancing and self-isolation continue.
As bricks and mortar banks reduce branch opening hours, digital banking has become essential and the crisis is accelerating long-term FinTech adoption trends.
In the early days of the crisis, there was a shared view that challenger banks such as Starling, Monzo and Revolut were perfectly positioned to attract new customers during the lockdown because they were digital banks. But recent research from Priori Data, commissioned by Sifted, found that challenger bank growth started to slow in March compared with the previous month. These brands saw their growth rate drop between 18% and 36% as digital downloads in native markets waned according to the research. There was also evidence that other neo-banks across Europe were also reporting a similar slowdown.
The battle to win customer trust
In difficult and uncertain times, this sluggish growth could be an early sign that bank customers are looking to stick with their own trusted providers to digitally manage their money. As NorthZone’s Jeppe Zink told Sifted: “The thesis around digital behaviour has long been that convenience trumps trust and security. But we’ll need to ask now if that is still the case.” Winning customer trust as the crisis continues will be more important than ever.
But there is still lots of ground to make up
Research by Liftoff and App Annie into app usage for the full calendar year 2019 found that the ‘self-reliant nature of contemporary FinTech apps has taken precedence over legacy banking apps’. Clearly, incumbent brands still have work to do. But traditional banks have a competitive edge in that they have deep pockets to invest in marketing campaigns to build trust and convince and convert new customers and retain existing ones. Liftoff CEO and Co-Founder Mark Ellis also see marketing tactics as a key competitive battleground to win trust in the coming year. Ellis asserts that finance app marketers should prioritise content such as tutorials and webinars to acquire and retain customers looking to take control of their money in these uncertain financial times.
What does the future hold?
The reported slowdown in March from some challengers could just have been a blip, and there are bullish reports of growth from other FinTech players. For example, AltFi reports that Monzo, PayPal and Barclays were the most downloaded financial apps in March. But will other traditional banks be nimble and agile enough to gain ground on the challengers? Will trust and security outplay the convenience of neo-banks as customers increasingly migrate to FinTech apps and other digital services? Only time will tell how this unfolds.
In our next post, we’ll look at how financial services providers can deliver agile innovative projects during the current crisis and beyond by innovating from the ‘outside-in’.