Fujitsu Report: Irish public not ready for challenger banks as concerns around security halts technology adoption

Providing greater mobility and faster services, challenger banks have all the ingredients for success, but public’s trust in technology is a significant barrier to widespread adoption, according to Fujitsu’s ‘From Demanding to Discerning: Tech and the New Banking Customer’ report.

For the most part, Irish consumers are still banking with traditional, high street institutions, rather than newer challenger banks. Three quarters of Irish customers still only use a high street bank (74%), making them among the most traditional in Europe. Only one in ten consumers banks solely with a challenger bank; this figure barely increases among the youngest consumers, millennials (11%) and Gen Z (12%).

Just 15% of the Irish public trust challenger banks fully, which is shown in the fact that just 13% of consumers only use a challenger bank. The reticence to take advantage of new solutions and services on the market makes Ireland one of the most conservative countries in Europe when it comes to banking habits.

Despite demanding better technology adoption from financial service institutions, the public has serious reservations about whether challenger or traditional banks can keep their data safe. These reservations could halt technology adoption for financial services institutions who are faced with the fact that 61% of the Irish public is worried technology will put their data at risk. A staggering 55% admit these concerns are a key reason they are not planning to adopt more digital banking services in the future.

Despite these concerns, many customers still prefer speed over security as over a quarter (26%) prioritise speedier transactions and transfers. This means that the speed at which challenger banks deliver services helps attract and retain customers, as 33% said they enjoy how quickly challengers provide them with information on their finances.

Across Europe, challenger banks certainly look set to gain ground in the coming years. Looking five years into the future,

— 17% will bank only with a challenger bank (from 14% in 2019).
— 35% will bank with a combination of challenger and traditional banks (from 21% in 2019).
— 48% will bank only with a traditional bank (from 68% in 2019).

Younger consumers will lead the charge into challenger-only banking, with over a fifth of 16-24 year olds (22%) and 25-34 year olds (21%) prepared to make the switch by 2023.

Commenting on the report, Anita Burke, Fujitsu Ireland said: ”Looking at how Irish people bank, they clearly value digital services but the ability to walk in to a bank branch is very important. Irish people still clearly value the human element of banking. Like all sectors, technology will play an increasingly important role for financial services but its successful adoption will rely on how financial institutions both build and maintain trust.

The collection and use of data will be particularly important. Showing consumers how technology like AI and blockchain can use their data positively and securely for uses like combating fraud will create a stronger bond between these companies and their consumes.“