Trust in neobanks is lacking, Plum customer analysis shows

By Sunniva Kolostyak

An analysis of FinTech app Plum’s customer base reveals that traditional banks are still being preferred over neobanks, with 91 per cent of users opting for incumbents.

According to Plum, 91 per cent of its customers are still opting for traditional banks over neobanks like Monzo, Revolut and Starling, with even tech-savvy customers preferring traditional offerings.

Plum is a London-based Open Banking tool which allows customers to use a smart saving algorithm to analyse income and outgoings. The analysis is based on a sample of Plum’s 450,000 customers.

The research suggests challenger banks still have a way to go before becoming the trusted banking partner for the majority, as only 9 per cent have linked a neobank to Plum as their primary account. Of these, 22 per cent have a traditional bank linked to Plum, suggesting nearly a quarter of neobank customers like to have the back-up of a traditional account as well. Just 2 per cent have linked a neobank as their second account.

Those between 18-24 has a somewhat stronger preference for neobanks with 13 per cent, but the dominant age group for Plum customers, 24-34, is lower, at 9.1 per cent.

The 55+ cohort shows the least interest in neobanks, with 95 per cent linking traditional banks to Plum. The most popular neobank overall for Plum customers is Monzo, and the most linked traditional bank is NatWest.

The analysis also showed that women tend to choose traditional banks, with only 34 per cent of those that do use a neobank as a primary account being female. Take up of neobank paid tiers among Plum customers also remains low – 27 per cent for Revolut Premium and 9.8 per cent for Monzo Premium.

Commenting on the findings, Victor Trokoudes, CEO and co-founder of Plum, said the majority of its customers are millennial-aged and are clearly comfortable with FinTechs as they are letting Plum put their savings on autopilot – however, they, and female customers in particular, are not flocking to the neobanks.

“There’s a lingering lack of trust in neobanks that still remains among our customers,” he said. “One issue is that you’re tied to opening a bank account with the neobank before you can do anything. This is a big commitment, and requires a large amount of customer trust. Inevitably, becoming more bank-like to win that trust means the focus is on being an efficient bank rather than on making things more efficient and maximising customer money.”

The FinTech has also seen that with its own solutions, neobank customers are more likely to be using Plum’s investment platform rather than simply setting money aside with Plum.

Last month, Plum rolled out new ‘Interest Pockets’ at 0.35 per cent AER.