The Fintech sector is booming, but customer trust in Fintech has still not got off the ground. Meanwhile banks are still generally seen as trustworthy.
As Philippe Torres, deputy Director of L’Atelier BNP Paribas, pointed out when he opened the Fintech Forum at the Digiworld Summit 2016 in Montpellier last November, we are now seeing a “rapid acceleration in investment in Fintech startups.‟ These investments totalled $19 billion in 2015 alone, plus a further $22 billion in 2016, whereas just five years ago this investment still only amounted to $1.8 billion per annum.
However, these rapidly rising figures are not yet being reflected in the number of customers actually starting to use this type of service. According to the World Fintech Report 2017 from Capgemini, written in conjunction with the European Financial Management Association (EFMA), barely 36.2% of French consumers admit to being customers of a Fintech company. It seems that as many as 82.9% of French savers do not trust these startups, fearing that their identity might be stolen or at least that their contact details will be passed on to unknown parties. In fact, this distrust extends to digital services in general, with only 37% of French people saying they trust online services (Source: Paris region-based testing, inspection and certification service Bureau Veritas).
So it is hardly surprising that Fintech sector firms unanimously make trust the central plank of their company strategy. Francis Barel, Director for Business Development at PayPal France, stressed this issue during a round table session in Montpelier. “We need to commit all our resources to building trust. It’s a question of security, management, and basic practicality. You can’t do better than create security and trust,‟ he told the Digiworld Summit audience.
This opinion is shared by Mourtaza Asad Syed, founder of French online private banking service Yomoni. “Trust in Fintech companies needs to be more like what you feel for your dentist or your doctor. That’s not easy because trust is emotional and our services are digital, but that’s what we’re aiming for,‟ he stressed. Philippe Baudoin from digital economy think tank IDATE talked about people’s “hesitations arising from the risk of dehumanisation linked to over-use of digital technology.‟
In short, Fintech firms still have a long way to go to build trust. And because of this, banks are likely to remain the institutions that people have most confidence in, with – according to the American Banks Association (ABA) – eight out of ten customers in the United States saying they trust their banks when it comes to payment security. In France, a BNP Paribas - CSA Research survey on digital technology found that over two out of three (77%) French people polled named their bank as their prime ‘partner of trust’ when it comes to helping them protect their bank data. This chimes closely with the view of L’Atelier BNP Paribas CEO Louis Treussard that partnerships between banks and Fintech companies are a good way of marrying the expertise, credentials and trust enjoyed by the one party with the ingenuity, agility, and ability to switch direction of the other.