Consumers today expect their needs to be met by multiple financial firms who bring highly integrated experiences to their client offerings, according to Ernst & Young’s (EY) 2021 NextWave Global Consumer Banking Survey.
The study, which explored consumers’ primary financial relationships (PFRs), found that both FinTechs and neobanks are gaining traction.
The survey of 12,000 consumers in 14 diverse markets across age groups, wealth tiers and genders, found that 27% of global consumers have relationships with neobanks. Of those consumers who have chosen neobanks for their PFR, 37% are aged 18 to 34, which includes Gen Z.
Among consumers who have chosen neobanks for their PFR, 20% are aged 25-34 and 11% are aged 65 or older.
The study also found that, as payments become key to PFRs, the market will pivot to neobanks, though the demand-driven need to offer multiple financial services providers presents a significant opportunity for traditional banks.
The rise of ‘super apps’ and preference for personalization also provides a strong driver for transformation at incumbent banks, the study suggested.
Nikhil Lele, EY Americas financial services digital and customer growth leader, said: “When it comes to trust, incumbent banks are still operating from a position of strength.”
The study found that trustworthiness and personal relationships are the most important factors driving trust in PFRs, outweighing product impacts.
Most consumers still choose banks for their PFRs today, though 27% of consumers now have relationships with neobanks, with the highest rates of adoption found in the Asia-Pacific region and Latin America.
The neobank market is set to reach £395 billion by 2026, compared to $19 billion in 2018, according to Zion Market Research.
Earlier this month, Boston-based neobank Envel began crowdfunding on StartEngine after pulling together $2 million from 2,000 investors earlier in the year on WeFunder.
Envel’s valuation has more than doubled since the company’s initial campaign, from $15 million to $35 million.
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