Consumers cite ‘data security’ as a reason for not switching their primary status to neobanks

• Many US consumers are concerned about the security of digital-only bank accounts.
• Established banks have a competitive advantage over neobanks in consumers’ digital trust.
• Insider Intelligence publishes hundreds of research reports, charts, and forecasts on the Banking industry. Learn more about becoming a client.

A sizable swath of US consumers don’t want to move their primary banking relationships to digital-only players due to security concerns, per a new survey from PYMNTS and Optherium.

At 47.4%, data security was the issue most widely cited by survey respondents who are either just “slightly” or “not at all” interested in switching their primary status to a digital-only bank supported by a large company.

Older respondents are more likely to name data security as a concern:

• For Baby boomers and seniors, 32.6%.
• For Generation X, the level falls dramatically to 25.2%
• Millennials and Generation Z have respective responses of 16.2% and 17.8%.

The results indicate that established banks have a competitive advantage over neobanks in consumers’ digital trust. The perceived superiority of incumbents in safeguarding consumers’ data will come in handy now that digital banking has become the norm:

• The survey shows that 82% of consumers use some kind of digital method to connect to their bank accounts.
• Results by channel show that mobile-app usage is the most popular, with 41.4% of respondents picking it as their most used method. Digital banking through a computer placed second in the most-used responses, at 26.1%.

People with above-average digital trust in their bank are more likely to be valuable customers in some respects than those with below-average trust, per our 2021 Banking Digital Trust Report:

• 38.8% of people with above-average trust were willing to open a new account or product with their bank, versus just 21.3% for those with below-average trust.
• 37.1% of people with above-average trust said they have multiple accounts with their bank, versus only 28.3% of respondents with below-average trust.

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