Customers 'trust traditional banks over digital startups'
WITH its young population, Ireland looks ripe for non-traditional bank startups like Britain's Revolut and Germany's N26 to get a large footprint in the market, although banks reckon customers still trust them with their money more than new entrants and others like retailers who are offering financial services.
Mainstream banks are concerned their lower-cost, internet-only competitors face lower regulatory burdens, although they believe the new entrants may initially only succeed in taking low-margin business, leaving the deeper and more significant financial relationships in their domain.
"When it comes down to the big decisions, people do like the reassurance of personal contact," Bruce Bullock, head of digital and innovation at Permanent TSB, told the Banking and Payments Federation Ireland conference in Dublin yesterday.
Mr Bullock said a survey of the Irish market the company had undertaken showed people did not trust retailers, for example, to run their banking relationships as much as had been expected.
Potential game-changers in the industry could include Amazon, Facebook and Google who possess vast quantities of information on their subscriber bases, though initial challengers in Ireland were likely to be digital-only offerings.
The likes of Revolut and N26, both of which already offer digital banking in Ireland and allow customers to open an account using mobile phones in seconds, are challenging mainstream banks who charge administration fees and sometimes hefty transaction fees. They also offer add-ons like free insurance and seamless low-cost currency transactions, though they could have some way to go.
"There is a group of us using Revolut to try to work on it and it is very slick, it is very, very good... sometimes it does not work," said Julian Skan, a senior managing director and global banking lead at Accenture Strategy.