Amazon and PayPal more trusted amongst younger generation than banks to hold their personal data

Latest research from global FS intelligence specialist, RFi Group, shows that Amazon, PayPal, Mastercard and Visa are viewed as more trustworthy than the banks for the younger millennials in the UK when it comes to personal data security.

RFi Group’s Winning the post-PSDII & Open Banking Customer study showcases that while awareness around PSD2 and Open Banking is low, at only 3% and 16% respectively, when asked who they trust to manage their personal and financial data, younger millennial UK consumers see some of the larger technology companies as better than or equivalent to their traditional banks. The report additionally shows that keeping information secure is the most important factor for consumers when deciding with whom to share their data.

On the other end of the scale, tech giant Facebook did not fare well, with 77% of UK consumers stating that they distrust this entity to hold and maintain the privacy and security of their data. This shows the immediate impact of the Cambridge Analytica data breach, as the study went into field just after this story hit the headlines.  Third-party apps that manage finances and new/emerging technology companies were also in the bottom three in terms of consumer trust, suggesting that the players hoping to gain the most from more access to data will have to work the hardest to win over the consumer.

Charles Green, CEO, RFi Group comments “At an overall consumer level, from a trust-scale point of view, banks are in the lead by a small margin. However, PayPal, Amazon and the card schemes are very close behind, and are winning for younger millennials. As the report shows that consumer behaviour will continue to be dictated by who they trust and distrust, the threat from Facebook can most likely be discounted, however there should be concern around what PayPal and Amazon might do. Traditional banks should be thinking specifically about what those brands have done to earn consumer trust.”

The report sheds light on why these types of organisations are trusted by consumers. Firstly, the proliferation of use amongst younger consumers for brands such as Amazon and PayPal, particularly in making payments, means that as long as they are not let down by these brands, they have a degree of comfort to potentially extend into other types of services. The schemes benefit also from not letting the customer down but from invisibility. Consumers state comfort with Visa and Mastercard as they exist in the background and do not bombard them with products and services.

Alongside information security, the most important drivers in breeding comfort for data sharing are brand presence and longevity. These three factors continue to be the biggest hurdles for the FinTech community. However, the report shows a disconnect between awareness of data sharing and actual data sharing, with fewer than 1 in 3 consumers claiming to share personal information with apps, but with 7 in 10 consumers using apps that require the sharing of some kind of personal information. This suggests that trust in lesser known third parties may be less of a barrier if the proposition is compelling enough.

Unlike a lot of disruption in financial services to date, which has been focused on existing pain points for consumers, the findings show that the biggest opportunities are in new value-added services.  7 in 10 UK consumers say that they find their everyday banking services very easy to use, and 91% are satisfied or very satisfied with their current digital or mobile banking offering.

Green continues, “Ultimately, the biggest opportunity is not going to arise purely from harnessing dissatisfaction, it is going to be in the offering of new and compelling market propositions. When exploring specific banking tasks, some of the biggest opportunities to delight customers will be through simplifying product applications, helping consumers avoid feeds, moving money more easily between accounts of different providers, budgeting and financial management tools.”

The study shows that 1 in 4 consumers found the concept of using payment initiation services appealing and the most likely service to use in the future. There was also strong appetite for third parties to access their account information for a range of other services, broadly related to avoiding fees, avoiding fraud (enabling consumers to be alerted to something untoward happening to their account for example) and financial optimisation, which included highlighting ways for consumers to receive better rewards, advice on getting the best from their money and notifying of lower cost services such as electricity and gas bills. Some differences arose across demographics, most significantly amongst millennials where P2P payments were comparatively popular.