Digital-first direct banks outperforming the top 50 global banks on key performance metrics including privacy, security and problem solving

 Mobile now considered the main branch for banking for anyone under the age of 53

Direct bank users three times more likely to trust a technology company to provide a financial mobile app over their bank

Britain’s challenger banks are outperforming incumbents when it comes to overall customer satisfaction, according to new research from leading financial services technology provider FIS (NYSE: FIS). 76 per cent of digital-first direct bank customers say they are ‘very satisfied’ with their banking relationships, compared to 69 per cent of those who bank with one of the top 50 global banks.

These direct banks also outperform established high street banks on key performance metrics including privacy, security, problem solving and real-time payments. However, incumbent banks outdo their challenger rivals when it comes to providing easy-to-use digital payments – the payment mode of preference for younger consumers.

These findings and more form the fourth annual PACE (Performance Against Customer Expectations) study from FIS, which surveyed consumers across all age and socio-demographic segments; asking them to rank the importance of nine key performance indicators for banking, and then to rate their primary banking providers’ performance against those expectations. The survey also asked respondents about a range of emerging and established banking trends such as open banking and digital banking.

Findings showed that all generations except baby boomers turn to their mobile phones first when interacting with their bank; more than desktop PCs, ATMs or bank branches. This trend is led by young millennials (18-26), with 76 per cent of digital bank interactions conducted via mobile, while only 21 per cent prefer desktops/laptops. For baby boomers or those over the age of 53 however, desktops/laptops remain the preferred channel at 66 per cent (just 26 per cent of baby boomers prefer smartphones.)

Overall, just one in five consumers surveyed had heard of the term ‘open banking’, with little generational difference. When defined, 55 per cent said they believe the potential risks outweigh the potential benefits of open banking, with just 10 per cent believing benefits outweigh risks (with 35 per cent unsure).

When asked who they would trust more to provide a financial mobile app, a bank or technology provider, the majority (61 per cent) said bank. Of those who bank with one of the top 50 global banks, just 4 per cent said technology provider, which rose to 12 per cent for those banking with direct banks.

Bruce Jennings, Strategic Development Director at FIS, commented: “This year’s PACE findings show just how competitive the UK market has become. Consumers are demanding ever-more consistent and convenient banking experiences, and it’s the mobile interface – not physical locations or even personnel – that are now the face of a bank.

“This presents a clear advantage for the digital-first challenger banks that have entered the market in the wake of PSD2. For long-established banks, open banking provides an opportunity to leverage consumers’ favourable views of their security protocols and engage the right technology partners to add the ancillary products and services customers want. However, they must first complete the long-avoided digital transformation to ensure they can effectively serve today’s customers and maintain their market dominance.”

The survey of over 1,000 UK banking customers was conducted in January 2018.