US consumers trust traditional financial services firms more than other organisations to secure their data, but banks are still having their businesses picked away by competitors as customers go elsewhere for many products.
This is according to research by Accenture of 4,000 retail bank customers in the US and Canada, and provides a stark warning to UK banks which are facing competition from challenger banks as well as IT companies offering financial services.
Although a massive 86% said they trust banks and financial institutions the most with securely managing their data, many are shopping around for services other than primary accounts.
For example, 70% went to other sources to purchase car loans, while 52% went elsewhere for their home mortgages. This trend means banks are missing out on additional, higher profit sales.
A massive 79% described their relationship with a bank as transactional or commoditised. “These consumers said that their relationship with their bank is defined by simple transactions like paying bills and receiving checking-account statements,” said the report.
Accenture's North America banking practice senior managing director, David Edmondson, said the report highlights several trends that are causing significant challenges for banks.
“Our report should serve as a call to action for them to focus more on improving customer perceptions and gaps in their digital offerings,” he added.
Read more about competition in retail banking
- Read about six IT companies that are shaking up retail banking
- Computer Weekly looks at six challenger banks and their use of IT to differentiate
- There is a rising clamour across the world for the big banks to be broken up and the technology industry is key to providing an alternative
According to the research, those aged 18-34 in the US and Canada change banks more often than customers in other age groups. It said 18% switched from their primary bank in the past 12 months, compared with 10% of customers aged 35-54 and only 3% of people aged 55 and older.
The arrival of new banks, some of which are digital only, looks set to bring real competition to the retail banking sector in the UK.
In 2013 the Payments Council introduced a system that enables consumers to change current account providers in seven days, rather than the 30 it took previously.
This system will be more useful once consumers have good reason to change accounts. Currently, there is said to be little point changing account suppliers because there is little difference in what they offer, but new banks are changing this.
In March 2015, Gocompare.com launched a current account comparison site, which uses Midata to give consumers access to their electronic data and help them make informed decisions about which service providers to use. This can be used by the Gocompare comparison site to match people with a current account that suits them.
Improving service levels through modern technology and offering competitive prioducts is vital if banks are to retain market share. One banking IT professional told Computer weekly: “The only real differentiation for me these days is how easy a bank's website is to use and how confident I feel about their IT security.
It's like bottled mineral water – there are a handful of big brands out there but the product in the bottle is pretty much identical. The only difference is the label and the price.”