The majority of consumers, or about 70%, still rely exclusively on banks for their financial services, but that figure will likely slip below 60% within the next five years as technology companies chip away at banks' grip on financial services, a new survey from TransferWise, a London-based money-transfer company, predicts.
So far, only 29% of respondents said they have ever used a financial services product from a technology company, and most often it was to make an in-store payment using a service like Apple Pay, Android Pay or Samsung Pay (18%), a loan (7%) or an international money transfer (4%). TransferWise conducted on online survey among 1,041 U.S. adults Dec. 21-15, 2015, in conjunction with YouGov.
But Americans seem bullish on a future where technology companies take over more financial services from banks. Nearly half—or 43%—of U.S. consumers surveyed said within five years they expect to routinely rely on a technology company instead of a bank for at least one financial service. More than a quarter of respondents, or 28%, said that by 2020, they expect to get most of their financial services from a technology company, not a bank.
The top reasons respondents said they would rely on technology companies instead of banks for certain financial services were superior security (34%), greater convenience (28%) and lower cost (25%). Nineteen percent said they would use a technology company over a bank if it made them feel more in control of their finances, while 17% cited better customer service, and faster service, as two more reasons to switch. Another 6% said the appeal of something new would draw them away from a bank to a technology company.
More than half, or 55% of survey respondents, said they believe technology companies are at least as secure as banks.
The survey results suggest major changes are ahead in the way consumers select their financial services, said Taavet Hinrikus, TransferWise’s CEO and co-founder, in a press release. “The financial services sector will look completely different in five years, with a host of new providers and innovative services,” he said. Banks will still be a major part of the delivery model, but technology companies will play an increasingly significant role in the mix, he said.