As technology improves how financial services are being delivered to customers – and their value – new research has found that 74 per cent of Americans would switch from their bank to safe and more cost-effective digital fintech (financial technology firm) services.
The same research also found that one in two Americans believe their bank fees are too high, while one in five believe banks are slow innovators.
The findings were derived from a survey of an independent panel of 1144 Americans by Money Transfer Comparison, a global comparison website that enables Americans to source the best money transfer rates, commissioned a survey of an independent panel of 1144 Americans.
The survery determines how Americans think their banks are keeping up with fintech innovation and competitive pricing, and whether they would be willing to switch from traditional banking to innovative fintechs such as specialist money transfer platforms, online lenders, virtual credit cards with spending trackers and trading platforms.
The survey found that three quarters (74 per cent) of Americans are willing to outsource their financial services to fintech digital services that were safe and more cost-effective than bank services.
Specifically, 39 per cent of Americans would switch for innovative low-rate credit cards, 35 per cent for personal or car loans, 30 per cent for home loans, 25 per cent for savings accounts, 22 per cent for budgeting apps, 15 per cent for share trading and 13 per cent for international money transfers.
Majorit Of Americans Prefer Fintech Services Over Banks
Higher income earners are more likely to outsource their financial services to more cost-effective digital services: 78 per cent of $100,000+ income earners would use fintech services, followed by 77 per cent of $50,000-$100,000 income earners and 69 per cent of under $50,000 income earners.
Wealthier Americans are more likely to switch to innovative digital services for home loans, personal and car loans, credit cards, international money transfers and share trading.
Specifically, 40 per cent of $100,000+ income earners would use a digital home loan service, compared with 31 per cent of $50,000-$100,000 income earners and only 22 per cent of under $50,000 income earners.
When Money Transfer Comparison compared responses across regions, it found Americans living in Western states (77 per cent) are most likely to outsource their financial services to low-cost digital service providers. This compares with by 75 per cent of Southerners, 74 per cent of Midwest residents and 67 per cent of Northeast residents.
Alon Rajic, Founder and Managing Director of Money Transfer Comparison, says: “It is encouraging to learn that Americans are willing to branch out from traditional banking services to digital service providers when they offer better value.
The movement of customers from big banks to smaller fintech services will also motivate banks to keep up more efficiently with innovation and competitive pricing.”
Overdraft Charges
Money Transfer Comparison found that more than half (57 per cent) of Americans believe their bank charges unreasonably high fees for missed payments, overdrawn accounts and account keeping services.
For instance, U.S. Bank charges $36 per overdraft, whilst major American banks charge average international wire transfer fees of $42.
Nearly one in four (23 per cent) Americans believe banks charge most for overdrawn accounts, 19 per cent believe bank account fees are the highest and 14 per cent believe banks charge most for missed credit card and loan payments.
Money Transfer Comparison analyzed these responses across states. More respondents from Western states (63 per cent) believe banks charge unreasonably high fees – compared with 59 per cent of Southerners, 57 per cent of Northeast respondents and 53 per cent of Midwest respondents.
As the fintech industry continues to rapidly evolve digital financial services, one in five (19 per cent) Americans believe that traditional banks have not been able to keep up.
Millennials and Generation X are the least impressed with the ability of banks to keep up with innovation, with 22 per cent of this group saying banks haven’t kept up, followed by 15 per cent of baby boomers and 11 per cent of Generation Z.
While similar proportions of US residents across the Northeast (17 per cent), Midwest (18 per cent), West and South (an equal 20 per cent) aligned on the consensus that traditional banks have not kept up with digital innovations used by fintechs.
Alon concludes: “Many consumers who are not satisfied with the banking fees they incur may remain loyal to their bank if they don’t do the research to find more cost-effective money transfer services, lines of credit and trading platforms.
I encourage Americans to do their research, including through comparison websites, to find the best-value financial service providers to ensure they are always getting the best deal.”
