‘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.
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.
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