Member Exclusive, New banks

‘Banks are a flight to safety’: Challenger banks are struggling to gain trust during COVID-19

  • Challenger banks look for new ways to remain relevant and gain user trust during the pandemic.
  • With incumbents given time to improve their digitized services, challenger banks may become less of a rising threat to the traditional banking industry.
close

Email a Friend

‘Banks are a flight to safety’: Challenger banks are struggling to gain trust during COVID-19

Like other industries navigating their way through the pandemic, challenger banks have their own set of challenges to face.

As new competitors in the banking industry, challenger banks have more difficulty than traditional banks when it comes to gaining user trust. During times of economic downturn, this is vital, as customers equate trust with financial security. In this case, traditional banks have the advantage of perceived reliability that comes with being longstanding establishments.

“Part of the fintech challenge is that in times of uncertainty and stress, traditional banks are seen as a safe haven. This partly reflects a flight to safety, as people hew closer to institutions with long track records that they judge more likely to survive an economic downturn,” said Alan McIntyre, senior managing director and head of the global banking practice at Accenture.


This content is available exclusively to Tearsheet Outlier members.

Tearsheet Outlier information and signup Missing out? Subscribe today and you’ll receive unlimited access to all Tearsheet content, original research, exclusive webinars and events, member-only newsletters from Tearsheet editors and reporters and much more. Join Outlier now — $59/mo Already an Outlier member? Sign in to your account

1 comments on “‘Banks are a flight to safety’: Challenger banks are struggling to gain trust during COVID-19”

  • Rather than look at fintech as adversaries, banks should embrace and partner with them. Many banks are lacking top-notch customer service and innovation, which is the fintech sweet spot. On the other hand, fintech need what banks have, which is distribution and regulatory.

    Big tech is the real competitor to banks since they have both distribution and consumer experience coupled with an infrastructure that’s able to produce product enhancements at lightning speed.

    Banks have the pipes, but they need to offer something more to consumers in order to keep them satisfied. Right now they are encumbered by legacy technology, products, and innovation culture.

    For banks to survive they need to bring propositions around not just lending, but all aspects of homeownership, getting an education, starting a business, and improving consumers’ lives. By partnering with fintech, it allows banks accessibility to a greater pool of insight and thought around these propositions.

Outlier OpinionsMakers

New banks

The first LGBTQ digital bank launches in the U.S.

  • The LGBTQ community in the US is estimated to include 30 million people with $1 trillion in spending power.
  • Underserved by incumbent banks, Daylight launches to better serve the needs of the LGBTQ community.
Rimal Farrukh | November 19, 2020
New banks

‘Making a meaningful impact throughout our footprint’: CIT Bank launches its Thanksgiving ‘Two Million Meals’ campaign

  • As in previous years, CIT Bank is launching a Thanksgiving campaign in partnership with Feeding America.
  • In light of the pandemic, CIT Bank is doubling its goal of donating 1 million meals to 2 million meals
Rivka Abramson | November 18, 2020
New banks, Podcasts

Step’s CJ MacDonald on building a bank for teens

  • CJ MacDonald cofounded gyft, which was acquired by First Data in 2014.
  • He's back with Step, a banking platform targeting teens with age-appropriate services and financial education.
Zachary Miller | November 09, 2020
New banks, Podcasts

‘There were all these other great services, but banking was kind of static’: Mercury’s Immad Akhund on banking startups

  • Entrepreneur Immad Akhund was disenchanted with banks serving his startup.
  • So, in 2017, he started his own challenger bank to service startups.
Zachary Miller | November 02, 2020
New banks

‘Transformation isn’t just about the glass window in front of you’: Temenos’ Alexa Guenoun on accelerating bank digital roadmaps

  • Temenos has spent about $1 billion acquiring technology companies in the U.S.
  • The firm's president of the Americas talks to Tearsheet about her plans to grow the region for digital banking software.
Zachary Miller | October 29, 2020
More Articles