Bank customers are actively turning to fintech start-ups in order to fulfill their financial needs.
More than half of all banking customers have now started using fintechs but while they are gaining momentum they are yet to overcome trust issues.
That’s according to the World FinTech Report from Capgemini and LinkedIn which also found that new providers, which are classified as being less than five-years old, are being heavily adopted by young, tech-savvy, and affluent countries – particularly in emerging markets.
It was found that over 75% of customers in China and India are using services provided by fintech firms.
The biggest area of uptake is in investment management with the report showing that 17.4% of customers use them solely while more than a quarter use them in addition to services provided by the traditional firms.
The WFTR report also showed that a number of customers are using multiple services from fintechs. It was found that 46.2% of users had started using one fintech and then moved assets to at least three others.
However, while the report revealed a lot of gains across markets only 23.6% of customers trust the fintech provider, compared to 36.6% for traditional firms. Neither show particularly high trust ratings but fintechs are struggling to overcome the perception that fraud protection, quality of service, and transparency are all better within the incumbents.
Despite the advantage held by incumbents when it comes to these issues, the report found that less than half of executives are confident in their innovation strategy.
Thierry Delaporte, head of Capgemini’s global financial services business unit, said: “With the exception of a handful of industry leaders, most firms are struggling to achieve positive results from their innovation initiatives with only 10 percent of executives stating they have been very effective at achieving desired innovation results.”
The report surveyed 8,000 financial services customers in 15 countries and conducted more than 100 interviews with senior industry executives across fintech and traditional firms.