Consumers’ Trust in PayPal and Amazon to Store Credentials Grows, Putting Banks on Notice

Consumers’ faith in their primary banks’ ability to store sensitive information safely may be slipping.

Trust and security have long been key loyalty drivers for traditional financial institutions (FIs) and may be partially behind why Americans are hesitant to break up with big banks.

By leveraging this trust, FIs have generally positioned themselves dependably when it comes to offering innovative consumer-facing financial tools. It has also historically given them a “home field advantage” when competing against the perhaps more agile neobanks and FinTechs.

One of the newer innovations in the financial space that hasn’t quite yet fully come to market is the credentials vault, currently being explored as a method of reducing payment friction at checkout. A credentials vault is a secure, encrypted platform where shoppers can safely store their relevant information once instead of re-entering card data each time they make an online transaction at a different merchant.

A credentials vault also has the benefit for both consumers and merchants of automatically updating shoppers’ shared information when account numbers or card information changes.

However, the study “Payments and Credentials Vaults: The Trust Factor,” a PYMNTS and FIS collaboration, indicated that some of that trust may be slipping when it comes to providing a credentials vault.

The value of a credentials vault is clear to any shopper who has had problems with their stored payment information on a merchant or bill payment platform. A previous PYMNTS/FIS collaboration found that 80% of consumers store payment credentials through multiple merchant sites to facilitate checkout. Many have experienced checkout friction, such as needing to update the information for expired or stolen cards, which has led to consumers abandoning a shopping cart at checkout.

Clearly, security concerns surrounding who is handling shoppers’ payment data is a driver for consumers curious about using a credentials vault, so trust is important. Of surveyed consumers, 58% cited a vault’s enhanced data protection as an important reason to use one. Although 38% of consumers overall were highly interested in using a credentials vault, that number rose to 61% among those who had experienced past problems with their payment information and had stored their credentials in 10 or more digital locations. Given this general customer enthusiasm for credentials vault implementation, the innovation could see wide consumer adoption, so long as customers trust providers.

Consumers have increasingly cited non-FIs overall as trustworthy providers of credentials vaults, rising 8% over the past two months. This growth alone indicates consumers are open to providers other than traditional FIs. It should not be understated that customers’ primary banks are still the top-rated potential credentials vault provider. However, it is noteworthy that this trust has slipped among surveyed consumers, and PayPal or another non-FI could soon take the top spot.

In the end, customers interested in a credentials vault will share their sensitive financial information with the companies and institutions they most trust. While banks have always had the luxury of relying on that consumer trust, in an age of rampant financial fraud, only time will tell if that continues.