Traditional banks should definitely be concerned about FinTechs after a new survey found that consumers are eager to see technology companies take on financial institutions with new banking solutions.
According to news from Bloomberg, a survey by consultant Bain & Co. found that nearly 60 percent of U.S. bank customers are willing to try a financial product from tech giants they already use. Younger respondents are even more open to it, with about 73 percent of people aged 18 to 34 saying they would try a tech company’s credit card, deposit account, investment or mortgage.
“They’re saying if you come up with an experience as simple and easy as my shopping experience is with Amazon, I’m ready to do that now,” Gerard du Toit, a Bain partner and co-author of the report, said in an interview. “We’ve seen this happen already in China, where it’s common for people to do many of their banking activities through WeChat and Alipay and players like that.”
The survey included responses from people in 22 countries, with well over 80 percent of respondents living in India and China saying they’re open to trying financial offers from tech companies. That is more than double the acceptance rate in France, which was the most reticent.
While tech giants like Amazon, Google and Facebook are expanding in the U.S. into areas such as payments or lending, they cannot take deposits because federal laws prevent companies from combining commercial ventures with fully fledged banks.
As a result, du Toit predicts that banks will partner with Amazon and other tech companies so that lenders could manufacture financial products, and tech giants would serve as distribution and servicing channels.
“It’s just a matter of time before we see the big tech players enter retail banking in the U.S.,” du Toit said. “You’re going to see a Darwinian battle between banks and tech firms, and some surprising combinations on how they get to market.”