Confidence in banks ‘higher than ever’ in 2020

There has been a significant rise in consumer confidence in the financial services sector since the start of 2020, with High Street banks and building societies leading the charge, according to new research.

A survey of 1,102 respondents for the Toluna Financial Services Sentiment Indicator found that the COVID-19 pandemic has driven up trust in financial institutions, with 55 per cent of people surveyed saying they had confidence in banks/building societies, an increase of 9 per cent compared to the 46 per cent who said the same in December 2019.

With the shift to digital services, confidence in online only banks is strongest amongst 18-34-year olds (42 per cent) and weakest amongst those aged 55+ at 29 per cent.

The biggest rise in confidence in online only banks occurred amongst 35-54 year olds, increasing from 31 per cent in August 2020 to 39 per cent in November 2020.

Insurers, credit card providers, the FCA and the Bank of England have also seen confidence levels increase by 4-6 percentage points over the course of 2020, the survey found.

With a significant rise in online activity during the pandemic, people are continuing to show greater willingness to engage with online financial services and products.

Nearly half (48 per cent) of those surveyed said they’d like to do more online when it comes to managing their financial services and products, compared to 42 per cent in February 2019.

The last year has also seen increasing adoption of online only financial providers, with 55 per cent of respondents agreeing that they are familiar with online-only financial services companies, up from 46 per cent pre-pandemic in February 2020.

The largest uplift was seen amongst 18-34-year old’s, rising by 10 per cent from 57 per cent in February 2020 to 67 per cent in November 2020.

Nearly two thirds (63 per cent) of people are happy to manage all of their financial products and services online, an 8 per cent-point increase from February 2020.

Contactless digital payments have also become a favoured choice among UK consumers.

Almost a third of those said they don’t need physical payment cards as they use their mobile phone for purchases, rising from 22 per cent who agreed with this pre-pandemic.

A majority (51 per cent) of 18-34-year olds agree that they don’t need physical payments cards compared to 10 per cent of 55+ year olds.

Again, the greatest increase from February 2020 to now is seen amongst the 35-54 year-olds, rising from 22 per cent in February 2020 to 33 per cent in November 2020.

When asked, 37 per cent of respondents said that they’d “be lost” without their mobile phone and it would be much more difficult for them to pay for items, which is an 8 per cent point increase on the 29 per cent feeling this pre-pandemic.

Michael Worledge, head of financial services at Harris Interactive, a Toluna company, said: “It’s good to see that confidence overall continues to rise, and especially that consumers feel that financial services providers have been better at protecting vulnerable consumers during the pandemic.This is likely to be due to measures such as overdraft interest free periods and repayment holidays being made available on a mass scale but could also suggest that the supportive messaging out there is being heard."

He explained that as we head into 2021, providers will need to continue to be supportive, monitor the needs of all customers and communicate clearly, particularly as and when support measures are removed.

He added: “A move towards servicing financial services and products online and using mobile phones as digital payments tools is nothing new, but it is something that is becoming commonplace, especially amongst those aged 35+, providing consumers with greater choice of how to access financial services. More than ever, providers need to optimise digital journeys, ensure that no one is overtly excluded from accessing these services and have in place support services that meet the needs of those who are late to digital.”

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