PARIS—A new report shows that consumers’ preference for fintechs over FIs is growing.
A study prepared by financial consultant Capgemini and nonprofit Efma shows that a majority of nearly 16,000 bank customers polled across 32 countries said that they would likely refer a fintech product they used to others. Just 38.4% said they would do the same for their bank.
The same report suggested that consumers’ migration to mobile banking is clear as is illustrated through recent bank earnings reports. BofA recently reported a 4.8% increase in mobile customers from the fourth quarter of 2015, rising to 19.6 million users in the first quarter of this year. Paul Donofrio, the bank's chief financial officer, said it was the most new users added in any quarter over the last three years. JPMorgan Chase's earnings report revealed a 19% increase in mobile consumers year over year, growing to 23.8 million.
Financial institutions have slowly begun partnering with fintechs. However, less than 18% of respondents to Capgemini's retail banking executive survey said they aimed to acquire fintech firms or technology.
"Most have come to the conclusion that they're not worth buying," Bill Sullivan, head of global financial services market intelligence at Capgemini, told CNBC. "There are not many fintechs out there looking to replace banks."
Yet analysts question how long big banks can keep up with the digital revolution. The Capgemini-Efma survey said less than 13% of the bank executives interviewed said their core systems will support a broader digital ecosystem in the long run.
What could check fintechs, which are currently not regulated like financial institutions, is the Treasury Department's Office of the Comptroller of the Currency (OCC), which is weighing how to establish regulations for digital businesses. The CFPB has also stated it will be paying attention to the startups.