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In banks we trust. Why not fintechs?

George Nott | Oct. 2, 2017
Australia debates how to make financial services more responsive to customer needs.

The Australian government is moving towards giving individuals more control over their banking data.

A Productivity Commission report Data Availability and Use, released in March, recommended customers gain “continuing shared access with the data holder”.

An independent review into Open Banking in Australia, commissioned by Treasurer Scott Morrison in July, looks set to go one step further.

“Greater consumer access to their own banking data and data on banking products will allow consumers to seek out products that better suit their circumstances, saving them money and allowing them to better achieve their financial goals,” Morrison said at the time.

Australian fintechs are salivating at the potential of an open data regime similar to those being forged in the UK, the EU and Singapore. The bigger banks may have no choice but to begrudgingly accept the changes.

But will mandatory open data lead to a mass exodus of customers from the Big Four? Will everyone suddenly switch their accounts and transfer their information over to smaller start-ups offering better deals?

It could all come down to one thing: trust.

 

Trust in me, just in me

People trust their bank to look after their data, even if they don’t trust the sector as a whole.

An Australian Banker’s Association (ABA) survey published last month found that only 31 per cent of Australians trust the industry, believing it to be driven by profit, not focused on customer need and too fuzzy with fees.

Yet more than half trusted and had confidence in their own bank.

A 2016 global study by Telstra found more than three quarters of millennials nominated banks as a platform they trust with their personal information, 25 times more than the number who nominated fintechs.

For the respondents, the main ‘trust factors' related to the security and privacy of data and transactions, the survey found.

The Big Four banks are ultra-sensitive about how their data security posture is perceived. They know it’s an advantage over newbies in the sector.

In a blog post yesterday, ANZ bank’s New Zealand chief operations officer Mike Bullock put it this way: “At its very core, banking is about trust”.

“Security is in a bank’s DNA and it’s a powerful advantage in a world of would-be disruptors,” he wrote.

Bullock’s colleague Darren Abbruzzese, general manager of data at ANZ earlier this year argued fintechs lacked people’s trust to keep their data secure.

“Despite their fresh approach and modern technology, these new entrants lack a key intangible asset that established banks have: trust. In spite of recent crisis and fines, customers still trust banking institutions as a destination for their personal and financial data, and with trust comes customer stickiness,” he said.

 

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