We look at the way consumers are reacting to cryptocurrency and how the digital finance world is evolving.
Despite more familiarity with digital banking, scepticism towards cryptocurrencies is rife in the UK, according to new research of over 12,000 consumers, including more than 2,000 in the UK, from Okta and Statista. Almost half (49%) of consumers would not be willing to use cryptocurrencies in the future, and only a quarter (26%) would.
Primarily, people do not feel like their money would be safe (52%). Others prefer using physical to digital currency (47%), and many prefer currency to be issued by a central authority like the government (41%), which cryptocurrencies are not.
Of those that would be willing to use cryptocurrencies, many like how they are resistant to government interference or manipulation (46%), and their inability to be counterfeited or double-spent (42%). People also feel like their money would be safer and better protected (41%).
“Although the perception, popularity and adoption of digital banking has improved, digital currency is still being met with scepticism,” comments Ian Lowe, Head of Industry Solutions at Okta. “It’s still early days for cryptocurrency, with India having just become the first major economy to announce its digital rupee, while China is testing digital yuan in certain cities. Nigeria has also recently launched a pilot, and El Salvador became the first country to use Bitcoin currency as legal tender. The UK is currently exploring the feasibility of a central bank digital currency (CBDC), nicknamed ‘Britcoin’, which would sit alongside cash and bank deposits. So while Brits aren’t bought into the concept now, this could change in the future, as our lives become more intertwined with the digital realm.”
Challenger banks = changing expectations
The emergence of challenger banks has revamped technology in financial services, spurring new digital capabilities from traditional banking providers. But this acceleration to online has seen consumers become less tolerant of banking issues, and much more likely to switch after a bad experience, with 81% of consumers saying they would be willing to switch banks after an incident, such as the implementation of additional fees (45%), a data breach (41%), or poor customer service (39%). Only 10% display loyalty to their current bank by stating that there is nothing that could lead them to switch to a different provider.
A huge majority (86%) of UK consumers have an online bank account, including almost a fifth (18%) with a digitally-native challenger bank, rising to nearly a third (29%) of those aged 18-29. Most Brits (61%) admit to interacting with banks and financial services more digitally than physically over the past year – some because Covid-19 made it inevitable (36%), and others because they found it more convenient (26%).
“Digital banking adoption was already well underway, and the pandemic has accelerated changes in financial services that are here to stay,” adds Lowe. “However, this has spurred higher expectations from consumers in tandem. Convenience has driven Brits online, but as a result, they want security, simplicity and reliability from their digital banking experience. If not, they won’t hesitate to make the switch to a competitor – something even easier now with the help of Open Banking.”
Physical vs digital banking
The steady decline of the physical bank branch has been well documented over the past few years. But across all industries, including healthcare, public sector and retail, many Brits would be willing to make the switch back from digital to physical interactions if they experienced weak security processes (46%), data breaches (44%), inconveniences (42%) or poor customer service (34%) from their online provider.
For the financial services sector, however, this is an unlikely outcome.Over half (53%) admit to preferring digital interactions with their bank, with less than a fifth (19%) preferring physical interactions, indicating potential repercussions for the survival of the traditional branch. More than two-fifths (42%) also confess to trusting their bank more because they don’t have to visit in-person.
With security standing as the most important attribute for consumers when interacting with digital financial services, over a third (35%) trust online banks to protect their data. Two-thirds (65%) of people also like that they can make transactions and access services more quickly online, and almost half (49%) say they have received a good digital service from their provider.