Anything For You All: [CHART] Here's why US customers have muted interest in switching to a nontraditional bank

Senin, 05 November 2018

[CHART] Here's why US customers have muted interest in switching to a nontraditional bank

NEW CHART & DATA: FINTECH

US consumers don't want to use neobanks, yet…

The European neobank market is crowded, while its US counterpart is still lagging behind. This might have to do with US customers not having much interest in switching to a nontraditional bank — only 9% of customers said they would be most likely to switch to an online bank with no branches, according to a study from cg42 seen by Business Insider Intelligence. The top 10 retail banks, including Bank of America and Wells Fargo, remain the favorite for the majority of US consumers surveyed, with 51% being most willing to switch to one of them.

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This muted interest probably comes down to a lack of awareness — and options. There are only few neobanks operating in the US right now, such as Varo Money, which recently received preliminary approval for a banking license, and Simple, which is owned by Spanish banking giant BBVA. As such, US consumers likely have relatively little experience with this new type of financial institution (FI), which probably affects how willing they are to bank with such a challenger. This lack of options is probably tied to regulatory barriers that make it very difficult to obtain a banking license in the US.

Incumbents would not be wise to rest on their laurels. Given the market is set for an influx of players from Europe, and Varo Money's successful banking application could inspire more homegrown options, time will likely increase customer awareness of neobanks, and thus willingness to bank with them. Moreover, if current consumer pain points, including banks being perceived as dishonest and not offering competitive prices, aren't resolved, the top 10 banks risk loosing 11% of their customers.

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