New research has shown that many Brits think their bank’s fees for spending money abroad are unfair or unreasonable, and a high proportion don’t even understand the fees being charged. Specifically, the research found:
- Only 26% of consumers understand their banking providers’ foreign spending fees
- 32% of consumers do not think their banks’ fees for spending abroad are reasonable
- 38% do not even know what the fees are
- 25% of consumers want their bank to provide better transparency over transaction and exchange charges
- 39% of those who use new digital-only banks (neobanks) whilst abroad, do so because they offer the lowest fees
The research comes from digital transformation specialist GFT, as part of its latest Banking Disruption Index; a quarterly assessment of consumer attitudes towards their bank’s digital capabilities.
It found the confusion around banking fees has been a major driver in people opening accounts with neobanks. More than two in five (42%) of consumers surveyed currently have a neobank account and half of those that do, opened their account for the currency exchange benefits it offers whilst spending money abroad.
Card payments continue to be the most popular method of payment whilst overseas, with almost half (47%) of consumers using a bank card from a traditional or neobank to make transactions. This high usage highlights why transaction fees are so important, and why increasing numbers of people are choosing to use neobanks whilst travelling abroad.
Over a third (34%) of consumers also said that the ability to choose whether to pay in the local currency or in GBP is the main factor for using a neobank whilst abroad.
Given the focus consumers are placing on how they spend whilst abroad, GFT set out to discover the additional services customers want to see more of from their banks whilst overseas, including:
- 28% of those surveyed said they would like their banking apps to offer real-time currency exchange rates
- 29% of 25-34-year olds want the ability to pay in GBP or local currency from different ‘pots’
Richard Kalas, Client Solutions Director, Retail Banking at GFT UK, said, “It’s clear there is a significant difference between the offerings provided by neobanks and traditional banks when customers are spending their money abroad. More digitally savvy customers are already taking advantage of neobank capabilities and it is inevitable adoption will only increase in future.”
As part of the Banking Disruption Index, GFT also assesses consumer sentiment towards their bank overall. In Q1 2023, the sentiment score dropped two points since Q4 2022, down to 77 points, signifying a downward change in consumer attitudes towards their banking provider.
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