Despite massive valuations, consumers and businesses rank neobanks as the lowest level of trust and personalized service according to the MANTL report
NEW YORK, October 13, 2021 / PRNewswire / – Neobank valuations continue to rise but only 7% of consumers and 8% of businesses trust neobanks rather than a traditional bank, according to the report. Bank impact report 2021 published today by COAT, a leading digital account opening solution for banks and credit unions. Neobanks also ranked last for providing personalized service, positive impact on local communities, convenience, and better access to under-represented communities compared to community banks, credit unions, regional banks and more. mega-banks.
The Bank impact report 2021, commissioned by MANTL in partnership with Wakefield Research, interviewed bank executives, small business owners (SBOs), and consumers to identify the impact of evolving banking trends on the local community and the role community banks and credit unions play in the U.S. financial system . The report’s findings underscore the resilience of the traditional banking model in generating trust and delivering personalized service, but foreshadows how the growing digital expectations of consumers and small business owners could eclipse other banking needs.
Despite the low levels of trust and the fact that nearly two-thirds of bank executives (61%) have observed an increase in fraudulent activity with accounts held in neobanks over the past 12 months, consumers and small business owners alike companies are still considering exclusively digital offerings. Almost half of consumers (47%) are likely to open an account with a digital-only bank in the next 12 months and 44% of small business owners are likely to open an account with a tech company financial over the next 12 months.
“Neobanks continue to score massive ratings, but consumers and businesses are not completely convinced by the neobank promise. In fact, they are just as likely to open an account at a community bank or credit union over the course of the next 12 months, “said Nathaniel Harley, CEO of MANTL. “The biggest threat to traditional banks is not a neobank, but the opportunity cost of not keeping pace with the growing demand for digital banking services. “
Online account opening is now a table issue but nearly half of banks and credit unions do not offer it
Currently, 43% of community banks and credit unions do not offer online account opening for consumers and the figure is even higher for businesses. However, more than half of consumers (58%) and SBOs (57%) will not do business with an institution that does not offer online account opening, whether they prefer to open an account online or online. anybody. With 48% of consumers and 50% of SBOs likely to open an account with a community bank or credit union in the next 12 months, this will significantly limit the acquisition of new customers, especially among young people and SBOs. high income, for institutions that don’t offer it.
“Consumers and SBOs are drawing a line in the sand: Online account opening is now a must-have feature and they simply won’t use a bank that doesn’t offer it. This is especially true for Millennials and Generation Z, ”said Harley. “Community banks and credit unions must act now to meet the demands of an economy that will be fully millennial-led by 2030 or risk losing younger customers with long-standing income potential.”
In particular, 77% of SBOs with more than 50 employees and more than half of SBOs (59%) with $ 1 million To $ 25 million of income also require opening an online account to do business.
“Community banks and credit unions have built incredible goodwill with businesses in their communities. Providing business customers with a simple and intuitive online account opening experience will be key to developing and sustaining these relationships in 2022, ”said Harley.
Bank executives predict housing crash in five years
The MANTL report underscored the critical role that traditional banks have played in the nationwide recovery of COVID-19. Three in four consumers (74%) believe that community banks and credit unions were important to their region’s ability to manage the economic conditions caused by COVID-19 and 88% of SBOs agree that community financial institutions have played a role. role in economic recovery. Additionally, bank executives report that a quarter (26%) of their business customers, on average, would have been taken out of service during the pandemic without their help.
Leaders remain positive about the near-term resumption of the pandemic: 95% of leaders are optimistic about the economic conditions of their local community over the next 12 months. However, 78% of executives predict a real estate crash in the next five years, signaling caution as real estate market prices hit record highs in 2021.
Community banks and credit unions are at the forefront of financial inclusion and accessibility
Consumers, bank executives and businesses stress the growing importance of providing access to financial services and financial inclusion, especially among underserved communities. Half of community bank and credit union leaders (48%) said their main banking benefit was providing financial inclusion to underserved communities and 90% of community banks and credit unions have implemented or are planning implement a formal financial inclusion program for underserved groups.
“Financial inclusion is an important social justice issue and a driver of economic mobility. By expanding access to financial services, community banks and credit unions help their communities remain resilient and their efforts are widely recognized and supported by consumers and businesses, ”said Harley. .
The study shows that these institutions are recognized for their efforts: the majority of consumers (55%) said that community banks and credit unions serve better and provide access to under-represented communities compared to neobanks, banks regional or mega-banks. In addition, a quarter of the clients of community banks and credit unions (23%) came to their institution after being underserved by a large national bank and 95% of community banks and credit unions gave a loan to a small business refused by a large bank. .
“The report’s findings suggest that consumers and business owners are increasingly aware of socially responsible banking practices and are making their banking choices based on the institution’s impact on their community and society at large.” Harley said.
Four in five SBOs said it was important for their bank to serve underserved communities.
Consumers don’t trust government-guaranteed bank accounts
Lawmakers proposed legislation on government-backed bank accounts, called FedAccounts, that would give consumers access to digital accounts held at the Federal Reserve that are accessible at bank branches and post offices. However, consumers are wary of government involvement in their finances.
Almost three quarters of consumers (70%) trust a private banking institution rather than a government institution for their banking needs. Gen Z are more likely to trust a government-run institution, which fits with Gen’s willingness to embrace new ways of managing finances.
“The idea of a government-backed bank account is not new, but it has received renewed attention over the past year. Whenever new government financial initiatives are proposed, such as FedAccounts or a digital FedDollar, the government must consider how consumer confidence can impact adoption. Some programs could be better delivered in partnership with existing institutions that have already won the trust of consumers, ”said Harley.
To view the full report, please visit https://mantl.us/2YsyhAc. To learn more about MANTL or schedule a demo, please visit www.mantl.com.
About Bank impact report 2021:
The Bank impact report 2021 was conducted by Wakefield Research in August 2021 and commissioned by MANTL to identify the impact of changing banking trends on the local community and the role that community banks and credit unions play in the US financial system. The report interviewed three key audiences: over 1,000 consumers, aged 18 and over with bank accounts; 500 U.S. small business owners who have a bank account, defined as those with an annual income of $ 25 million or less; and 100 community bank leaders and 50 credit union leaders, defined as vice presidents and above, who manage between $ 500 million and $ 50 billion in assets. For more information or to download the full report, please visit https://mantl.us/2YsyhAc.
MANTL is a banking technology company offering the leading account opening software. Our platform enables regional and community banks and credit unions to grow up to 78% faster. These institutions play an essential role in our economy and we want to preserve it. Founded in 2016, MANTL clients have raised billions in core deposits to date. MANTL is a private company headquartered in new York with the support of major venture capitalists. For more information, visit www.mantl.com.