Bad banking experience? +80% of Brits would change bank after an incident

By Gaia Lamperti

While the rise of challenger banks has revamped technology in financial services, spurring new digital capabilities from traditional banking providers such accelerated shift to online has also gotten consumers less tolerant of banking issues. A new study from leading independent identity provider Okta and consumer data platform Statista found out that particularly British people are much more likely to switch banks after a bad experience now.

The survey, which was completed through an online platform and had a representative sample of more than 12,000 office workers in 9 countries across Europe, showed that 81% of consumers in the UK would be willing to switch banks after an incident, such as the implementation of additional fees (45%), a data breach (41%), or poor customer service (39%). Only 10% display loyalty to their current bank by stating that there is nothing that could lead them to switch to a different provider.

A huge majority (86%) of UK consumers have an online bank account, including almost a fifth (18%) with a digitally-native challenger bank, rising to nearly a third (29%) of those aged 18-29. Most Brits (61%) admit to interacting with banks and financial services more digitally than physically over the past year – some because Covid-19 made it inevitable (36%), and others because they found it more convenient (26%).

“Digital banking adoption was already well underway, and the pandemic has accelerated changes in financial services that are here to stay,” comments Ian Lowe, Head of Industry Solutions at Okta. “However, this has spurred higher expectations from consumers in tandem. Convenience has driven Brits online, but as a result, they want security, simplicity and reliability from their digital banking experience. If not, they won’t hesitate to make the switch to a competitor – something even easier now with the help of Open Banking.”

The decline of physical banking

The steady decline of the physical bank branch has been well documented over the past few years. But across all industries, including healthcare, public sector and retail, many Brits would be willing to make the switch back from digital to physical interactions if they experienced weak security processes (46%), data breaches (44%), inconveniences (42%) or poor customer service (34%) from their online provider.

For the financial services sector, however, this is an unlikely outcome. Over half (53%) admit to preferring digital interactions with their bank, with less than a fifth (19%) preferring physical interactions, indicating potential repercussions for the survival of the traditional branch. More than two-fifths (42%) also confess to trusting their bank more because they don’t have to visit in-person.

With security standing as the most important attribute for consumers when interacting with digital financial services, over a third (35%) trust online banks to protect their data. Two-thirds (65%) of people also like that they can make transactions and access services more quickly online, and almost half (49%) say they have received a good digital service from their provider.

Brits not sold on cryptocurrency (yet)

Despite more familiarity with digital banking, scepticism towards cryptocurrencies is rife in the UK, Okta’s study found. Almost half (49%) of consumers would not be willing to use cryptocurrencies in the future, and only a quarter (26%) would.

Primarily, people do not feel like their money would be safe (52%). Others prefer using physical to digital currency (47%), and many prefer currency to be issued by a central authority like the government (41%), which cryptocurrencies are not.

Of those that would be willing to use cryptocurrencies, many like how they are resistant to government interference or manipulation (46%), and their inability to be counterfeited or double-spent (42%). People also feel like their money would be safer and better protected (41%).

“Although the perception, popularity and adoption of digital banking has improved, digital currency is still being met with scepticism,” adds Lowe. “It’s still early days for cryptocurrency, with India having just become the first major economy to announce its digital rupee, while China is testing digital yuan in certain cities. Nigeria has also recently launched a pilot, and El Salvador became the first country to use Bitcoin currency as legal tender. The UK is currently exploring the feasibility of a central bank digital currency (CBDC), nicknamed ‘Britcoin’, which would sit alongside cash and bank deposits. So while Brits aren’t bought into the concept now, this could change in the future, as our lives become more intertwined with the digital realm.”