A report from budget management fintech Frollo and payments company EML has revealed survey findings around consumer trust and technology in the lending space.
More than half (53 per cent) of consumers ranked responsible lending as “extremely important”, while 23 per cent found it “very important” – in contrast to 14 per cent that rated it as “not at all important” or 2 per cent who said “somewhat important”.
Personal finance management features, such as seeing accounts in one place, tracking spending and tips on improving finances, were also ruled to be of high significance. Around half (45 per cent) of consumers called it “extremely important” while 23 per cent said it is “very important” (68 per cent combined).
Among younger consumers (aged 18 to 34), the proportion of people finding personal finance management tools extremely or very important rose to 79 per cent.
“It shows that most respondents find it very important their lending ensures they don’t take out a loan they can’t afford, and even want their lender to help them pay it down after they’ve taken it out. The high value placed on lenders providing tools to help manage their money better is another indicator consumers expect more from their lenders today,” a spokesperson for Frollo told Mortgage Business.
“Just providing a good loan at a great rate is no longer enough. To earn the consumers’ trust and business, you have to show you have their best interests at heart.”
The majority of younger people and two-fifths of all respondents (41 per cent) want instant credit decisions after they share their financial information digitally. More than half (55 per cent) of 18-34-year-olds called it “very important”, in contrast to 30 per cent of consumers over the age of 65.
Open banking and data sharing technology is expected to further enable access to many items in demand, such as responsible lending and tools to manage debt, the Frollo spokesperson added.
However, neo-lenders largely lag behind major banks in consumer trust levels. The report referred to recent Finder sentiment research concluding that overall trust sits at 23 per cent for the big banks, in contrast to 10 per cent for fintechs.
Deloitte research has also shown that traditional financial institutions rank above neobanks and fintechs for consumer trust around money and data.
Generally, Frollo’s survey found that consumers were satisfied with their banking providers. On average, 11 per cent were unhappy, but for high-income earners, dissatisfaction climbed to 39 per cent.
“It takes time to win consumer trust, and every neobank will have to prove themselves over a longer period of time, especially when it comes to trusting them to keep their money and information safe,” the Frollo spokesperson said.
“Neobanks and neo-lenders have a big opportunity to prove they have their customers’ best interests at heart, something that major banks have a real challenge with.”
Open banking may also build trust, the Frollo report noted, when it allows consumers to control who is able to access their data, for what purpose and for how long.
Meanwhile, the ability to draw on an emergency buffer, by turning a debit into a retrospective loan that can be paid off in instalments proved popular with the majority of younger and middle-aged people.
At least 50 per cent of respondents ranked the feature of high importance when taking out a personal loan. But the feature resonated less for people with higher incomes – with 17 per cent of consumers that earn $180,000 or more per year finding it very important.
Gaining instant access to funds via a virtual debit card was also deemed very important by 38 per cent of respondents – ranked most highly by people earning under $140,000 per year. The feature was far more important for younger consumers, with 61 per cent of 18-34-year-olds saying it is of high importance (twice as much as the 65+ demographic).
Sarah Simpkins is the news editor across Mortgage Business and The Adviser.
Previously, she reported on banking, financial services and wealth for InvestorDaily and ifa.