Consumers look to ‘new banks’

A growing number of consumers in the West Midlands would consider banking with non-traditional financial institutions, or ‘new banks’, according to research by YouGov on behalf of Deloitte.

More than a third (40 per cent) of those surveyed in the region as part of the research said they would consider moving their banking relationship to a ‘new bank’, with 62 per cent expressing more concern about the safety of their bank than they did two years ago.

A quarter of respondents indicated that they had moved one or more of their banking relationships in the last two years due to the way their bank had treated them.

Matt Perkins, financial services partner at Deloitte in Birmingham, said: “These findings reveal how the concerns consumers have towards their traditional banking relationships are making them more likely to explore alternative options with non-traditional organisations. 

“When coupled with the change in the economics of banking – due to fundamental shifts in both the demand and supply side of the business – it is clear that there are real opportunities for suitable businesses to extend their offering for new entrants to emerge.

“However, our research also makes it clear that there will likely be fears about the expertise, security and reputation of any such ‘new banks’, and suggests that consumers will only switch if these newcomers provide what consumers really want – namely fairly priced core banking products offered through a convenient branch network.”

Of those respondents who said they would consider buying a financial product from a non-traditional bank, 64 per cent would consider taking a credit card with that institution. In addition, more than half (57 per cent) said they would think about opening a savings account and only 18 per cent would consider taking out a mortgage.

Mr Perkins said: “As concerns over banks remain fresh in consumers’ minds, there is a real opportunity for non traditional institutions to make a play for their customer relationships.  Obviously customers are more cautious about certain products, such as mortgages, but with half of respondents stating that they would consider taking their banking relationship to a non traditional organisation, we could see an evolution in the retail banking space sooner rather than later.

“However, new types of financial institutions must be aware that consumers are still interested in elements of ‘old fashioned banking’, and the importance of having branches and face-to-face interaction with customers should not be underestimated.”

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