Home Business NewsBusinessBanking News Covid-19 erodes UK consumer trust in banks – here’s why

Covid-19 erodes UK consumer trust in banks – here’s why

by LLB Editor
8th Dec 20 9:14 am

The replacement of in-person branch interactions with impersonal digital transactions during the COVID-19 pandemic has accelerated the ongoing erosion of consumer trust in banks, according to a new report from Accenture.

Accenture’s 2020 Global Banking Study finds that the COVID-19 pandemic has further accelerated consumer adoption of digital banking channels, removing the human element and further eroding consumer trust. According to the report, less than one-third (30%) of UK consumers trust banks to look after their long-term financial well-being, compared with 44% two years ago.

On the one hand, the pandemic has helped accelerate acceptance of alternative forms of communication, with 46% of customers saying they would be willing to speak to a bank advisor via video call once branches reopen, up from just 12% prior to the pandemic. But banks need to understand how different channels affect consumer trust. Crucially, only 29% of consumers would place ‘a lot’ of trust in speaking with a human advisor on a video call, compared to 52% speaking in-person at a bank branch.

Peter Kirk, Accenture’s UK customer insight and growth practice lead, said: “COVID-19 has dramatically accelerated the shift to digital at a pace banks could not have foreseen and this is threatening their relationships with customers. This mass acceleration to digital is a double-edged sword for banks. While the necessary digitalisation of their services has helped them to support customers throughout the pandemic, it has all but removed the vital human element from banking. It has also forced certain pockets of consumers, who primarily relied on face to face banking services, into the digital world. This has all had an unintended impact on consumer trust and the overall banking experience.”

While the COVID-19 pandemic has eroded consumer trust in traditional financial services, Accenture’s findings are even more stark for fintech firms.

Less than half (45%) of consumers believed that neobanks would exist in 12 months’ time. Similarly, only 10% said they placed ‘a lot’ of trust in neobanks to look after their data, compared to 41% for traditional banks. Alarmingly for fintechs, 20% of UK consumers responded “not at all” when asked if they trusted neobanks to look after their financial wellbeing.

When asked the main reasons why consumers would not bank with a neobank, half (50%) said they were happy with their current provider, while 42% said they were unfamiliar with what neobanks offer.

Peter Kirk added: “With such low confidence in neobanks’ long-term survival, it’s clear that customers are seeking greater stability and consistency from their existing financial services providers – a flight to safety during the uncertainty of 2020. The pressure on banks – both traditional and digital – to meet consumers’ needs for convenience and safety is higher than ever. The challenge is on to create propositions that effectively reconcile the rapid and inevitable shift to digital in ways that feel more personal and relevant.”

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