Half of banking customers around the world are using the products or services of at least one fintech firm, according to the first World FinTech Report (WFTR) from Capgemini and LinkedIn, but customer trust in fintech providers is low.
The results of the WFTR, in collaboration with financial industry networking body Efma, come from a survey of 8,000 customers in 15 countries, and finds fintech products and services are gaining momentum among younger, tech-savvy and affluent customers.
Emerging markets led the adoption where more than 75% of customers in China and India report using services provided by fintech firms, followed by the United Arab Emirates and Hong Kong.
However, overall customer trust in these providers remains low. Fewer than one in four (23.6%) customers say they trust their fintech provider compared to 36.6% for traditional firms.
Customers said traditional financial institutions hold advantages in their minds over fintech providers when it comes to fraud protection, quality of service and transparency.
Lack of transparency
“Rising customer expectations for more personalised and advanced digital experiences, advancements in technology, greater access to venture capital and lower barriers to entry have created fertile ground for growing fintechs,” says Penry Price from LinkedIn.
“Fintechs are largely gaining momentum by meeting needs traditional players have yet to address, but many lack the transparency required to earn the trust of their consumer audiences to capitalise on these opportunities.”
The survey also found less than half (44%) of traditional financial institutions’ executives felt confident in their fintech strategy.
Such firms are responding to the disruption caused by fintech entrants into the banking market by giving their highest priority to investment in technologies which “facilitate more streamlined and effective operations, thereby providing better day-to-day customer experiences”.
Work to do
Nearly 90% of executives report they are most focused on implementing big data and analytics, followed by the internet of things (IoT) (55.8%), blockchain (54.7%), robotic process automation (52.3%) and open API technologies (50%).
“Both fintech and traditional firms still have work to do on delivering a better customer experience,” adds Vincent Bastid from Efma. “The arrival of fintechs has accelerated the improvement of overall customer experience in the industry, but it is still not at the level that customers perceive that it should be.
“It is only a matter of time before big tech companies and players in ecommerce and telecommunications join in to stake their claim to benefit from this industry disruption.”