Very low trust and negative perceptions of UK FinTechs driven by risk and legitimacy worries, study shows

By Puja Sharma

August 01, 2024

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FinTechs in the UK have amongst the lowest trust levels in the world and cryptocurrency-focused businesses are profoundly distrusted, according to the Edelman Trust Barometer
A third (32%) of UK adults are concerned about FinTechs failing and taking their money with them, and 30% are concerned by data privacy and cyber-crime concerns, both of which are driving negative perceptions of fintechs, according to research recently conducted by Edelman Smithfield
A similar number (34%) of people are concerned cryptocurrency businesses may go bust, while 33% say they don’t understand cryptocurrencies, so don’t understand the businesses focused on them

FinTechs and cryptocurrency businesses have a major trust problem in the UK, based on PR firm Edelman’s 2024 Trust Barometer financial services supplement, with both financial subsectors experiencing very low levels of trust compared to the rest of the world. According to a consumer perception study conducted by Edelman Smithfield, Edelman’s financial communications arm, one third (32%) of UK adults say it is the worry of FinTech companies going bust and taking their money with them that is driving negative perceptions of these firms. This fear is followed by concerns around data privacy and cyber-related risks; 29% of UK consumers see this as a contributing factor to the negative perception of FinTechs, and this percentage rises to 36% amongst UK consumers aged 55+.

Younger consumers more judicious of quality & legitimacy of technology

Younger generations are more critical of the quality and authenticity of the technology being used by FinTechs than older peers. One in five (20%) UK consumers distrust the technology being used; this number rises to one in four (25%) of 18-24-year-olds and drops by 10pc to 15% amongst 45-54-year-olds, and by 5pc to 20% amongst consumers aged 55+.

UK consumers are also wary of the robustness of the technology platforms on which the products and services operate, and this concern is felt more keenly by younger consumers; 28% of 18-24-year-olds worry that a FinTech’s platform could suffer a technical failure, whilst only 18% of 45-54-year-olds, and 20% of consumers aged 55+ think the same.

Crypto concerns

Concerns over legitimacy and security similarly abound for cryptocurrency-focussed businesses. When asked about the reasons crypto businesses may have a reputation problem, a third (33%) cite the fear they might go bust and lose their money – the same number of consumers who say that “they don’t understand cryptocurrencies, so don’t understand businesses selling them”. The UK public tends to be more sceptical than other nations (US, Germany, Italy, France, Spain) polled: 29% of UK respondents are concerned about the legitimacy of cryptocurrency businesses, versus 25% all-country average, and 27% think that there is insufficient regulatory oversight, versus 23% average.

Whilst consumer protection and security are important factors when considering how, in the opinion of respondents, cryptocurrency businesses can improve their reputation, the single most cited way (with 46% selecting it) they can do this is to “make it clear that cryptocurrency investing is different from stock investing due to the lack of underlying value”.

Security and stability key to enhancing reputation of FinTechs

Providing clarity on the security of the service or product is the most meaningful way for FinTechs to improve their reputation, according to almost half (47%) of UK consumers.

The significance of this factor in bolstering FinTechs’ reputations varies across regions; for example, in Northern Ireland and Greater London, 62% and 52% of consumers respectively believe FinTechs need to be transparent around product security to bolster reputations, whereas only 42% of consumers in the East Midlands and 43% in the North West think the same.

It also varies across age demographics. Whilst a significant number (41%) of 18-24-year-olds think providing clarity on product security is important in bolstering FinTech companies’ reputations, other factors are more important to this age group: 47% of UK consumers in this bracket want to see FinTech companies demonstrate partnerships they have with established financial institutions, in comparison to 34% of consumers aged 55+. Almost half (46%) of 18-24-year-olds also want to see FinTechs communicate the consumer protection elements of the offer, in order to build their reputations amongst customers.

Security is a key consideration across the board, evidenced by the second most selected factor averaged across all age groups; 44% said that for FinTechs to improve their reputation, they should “communicate the consumer protection elements of the offer”.

Commenting on the findings, Aidan Holloway, UK Head of Financial Services, Edelman Smithfield, said: “Despite the UK market being Europe’s FinTech capital, driving high levels of inbound investment and being home to some great business success stories, it appears that FinTechs have a real trust problem. When it comes to improving the perception of UK FinTechs, it is clear that it is all about demonstrating the resilience of the business model and its technology. Security, security, security should be the mantra of any consumer-facing FinTech.

“What is surprising about the research is that FinTechs appear not to enjoy a much better reputation than cryptocurrencies, despite the high profile issues the sector has experienced in the last 18 months. While questions around legitimacy and worries about a perceived lack of regulation come to the fore, there is a more basic communications challenge for crypto businesses. Make it very clear to customers that purchasing cryptocurrencies is different from buying stocks, and that there is no underlying value to investments. Transparency, in a market famed for the dearth of it, is key.”

August 01, 2024