The UK is a global financial services hub and home to some of the most advanced and innovative fintech companies in the world. The country stands out as Europe’s most attractive location for international investment, securing over $9 billion in investment in the first half of 2022, well ahead of Germany, Europe’s second largest fintech destination, with $2.4 billion.
Given the high levels of investment and innovation that we have experienced in recent years, the maturity of the sector’s ecosystem is extremely advanced. And UK-based fintechs are known for offering the best financial products and services, either solely or through partnerships with larger financial institutions.
This is having a very tangible impact on people’s attitudes about how they interact with financial services in the UK. To understand this, as well as attitudes across Europe, CRIF commissioned a study asking thousands of people across the continent about their preference in this area. And the findings speak for themselves.
Britons are almost twice as likely as their European counterparts to prefer online application processes for financial products and services, via a website, app, online chat or video call feature (59% vs. 33%). On the other hand, the preference in the other countries studied – France, Germany, Italy, Slovakia and the Czech Republic – remains firmly in favor of meeting in person and going to a local bank branch.
This success should be celebrated and underscores not only the UK’s place as a hub of innovation, but also consumer embrace of new digital approaches to financial services that give them greater control, understanding and greater security over their money.
Yet despite the clear success of the sector in the UK, our research has also identified some major issues preventing financial services from reaping the full benefits of this digital adoption. One such problem is that many consumers in the UK still tend to view financial service providers with scepticism.
Specifically, our research reveals that many consumers are concerned that financial service providers do not have their best interests at heart. In fact, almost one in five consumers (18%) fear that if they turn to their supplier for help, they will be sold products or services that are not right for them.
Knowing your customer is of course essential to offer them the right products and services, but when the question of data, privacy and fraud comes into play, this level of mistrust only increases. Our research shows that over two-thirds of UK consumers (67%) believe that sharing their financial data would make them more vulnerable to fraud. Compared to the rest of Europe, where an average of 55% express concern, it is becoming clear that issues of trust are holding back financial services in the UK, particularly when it comes to further digital adoption .
Despite these issues, however, our UK research identifies clear areas where the industry should be encouraged and focused. For example, UK consumers say they would be more willing to share their data with financial service providers if they knew it would benefit them in the long run and if they knew their information was secure. Meanwhile, nearly 4 in 10 (37%) would be willing to share more information if it improved their ability to borrow – this is particularly relevant during the cost of living crisis when more and more people are turning to financial services to help alleviate financial pressures. And unsurprisingly in the UK, young people are the most open to this with more than half (53%) of 18-34 year olds saying they would be willing to share their data in exchange for these benefits.
It is clear that once presented with the benefits that sharing more of their financial information can create, more people in the UK are willing to do so. Across the ecosystem, there now needs to be greater acknowledgment of this sentiment and more effort to address the trust issue that has clearly developed among consumers, so that more people can benefit from things like more accurate credit scoring, lower-risk loans, and tailored products and services. to the specific situation and needs of consumers.
The latter – more personalized financial products and services – especially during the cost of living crisis is more vital than ever for consumers. As such, financial services institutions and providers of all sizes need to do more to educate their customers about the benefits of online banking and other digital forms. Innovations such as open banking, for example, are safe, have high security standards and offer a range of benefits to consumers. And technologies like this can boost financial well-being by assessing the financial situation of individuals and improving their ability to borrow.
Once trust has been cemented, financial institutions can, during this crisis, step up and continue to offer customers the best solutions of their kind with confidence. Only then will financial services in the UK be able to ensure that all consumers and businesses can fully reap the benefits of the digital revolution and face any economic uncertainty with greater confidence.