Consumers trust banks with their financial details more than technology companies such as Google, Apple and Amazon, according to research from Bizrate Insights, but the likes of PayPal could form strong competition for banking services.
While banks face competition from a new breed of finance firms that boast state-of-the-art technology, traditional banks' secure IT systems could be their biggest advantage.
The study of more than 6,000 people found that three-quarters of online shoppers don’t even trust large retailers with their card details.
In comparison, 72% said they trust their bank with card details.
Consumers use web-based services, which are trusted and have good IT, every day. If services such as PayPal, Amazon and Facebook moved into banking, they would attract customers. Their systems already contain details about people and businesses, and handle monetary transactions.
Challenger financial services firms such as PayPal and Amazon were the next most trusted, but were some way behind, with 48.9% trusting PayPal and 45.4% trusting Amazon. Tech giants Apple and Google were some way behind at 21.4% and 12.9% respectively.
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“Among these tech transactional titans, it is those that have low barriers for usage and have put consumer protection in the forefront that have earned the greatest trust,” said Hayley Silver, vice-president at Bizrate Insights.
Silver said while trust is not as high for PayPal as for banks, it is substantial and there is an opportunity.
“PayPal ranking number two, and with greater than 50% trust from the younger generation, could be a major opportunity that deserves more investigation among its customer base,” she said.
“With low barriers to usage and such high levels of trust, PayPal could make a strong case to add a walletless payment option to its arsenal,” she added.
In its Why Google bank won’t happen report, analyst firm Forrester said the high costs and strict regulation of setting up a traditional bank – alongside advertising revenue coming from banks – will push internet firms into roles that support the relationship between banks and their customers. These include transactional payment services, financial advice, money management and product comparisons.