UK Banks Turn To Trust As FinTech Competitive Foil

With challenger banking revving up in the U.K. market, High Street challenger banks are looking for ways to continue to set themselves apart with consumer and small business clients.

Reports in CNBC on Wednesday (July 3) said top banks including HSBC and RBS are introducing new technologies and services to enhance the end-user experience, but are ultimately relying on the trust that clients have with traditional bank brands to gain a competitive edge against new market entrants.

“I think one thing which remains a truism is customers do have a very high degree of trust when it comes to money, their deposits and their identity with respect to established banks,” said HSBC Head of Digital for the U.K. and Europe Raman Bhatia in an interview with the news outlet. “And banks need to work harder than ever to preserve that trust.”

Amelia Nicholls, chief of staff at RBS’s new standalone digital-first bank Bo, agreed.

“Customers trust legacy banks to keep their money safe, but they’re slightly unsure of FinTechs keeping their money safe,” Nicholls said in the report. “We’re kind of the best of both worlds. We’re looking and acting and being built like a FinTech startup. But actually we have that backing of NatWest and hopefully that’s an advantage.”

Bo is just one example of traditional banks’ efforts to capitalize both on customer trust and rising demand for digital-first solutions. Reports pointed to HSBC’s Connected Money solution, a mobile app to help users manage money based on transactional data from their accounts at HSBC, Barclays and Lloyds.

Traditional banks are also challenged to retain their customers amid government initiatives to promote bank switching, a regulatory crackdown on mistreatment of small business borrowers and the acceleration of bank branch closures. According to Nicholls, customers expect mobile and digital-first solutions, giving FinTechs and challenger banks a leg-up on the competition, particularly with younger consumers and small business owners.

The report pointed to Caci research that found mobile banking will surpass the popularity of physical bank branches by 202.