Although only a minority of Americans say they are “very likely” to recommend their bank, they tend to stay with them out of convenience and trust, according to respondents who participated in Fannie Mae’s third quarter 2018 National Housing Survey (NHS).

The survey also found that tech companies, which are increasingly offering financial services to consumers, do not inspire much trust.

Still, more consumers are willing to trust their favorite tech firm for some financial needs, including applying for a mortgage. The survey also found that while most Americans see their primary bank’s online services as providing most or all of what they want to do, the banks’ speed, rates, or online experience is not why they remain customers. Additionally, consumers revealed that they are less comfortable performing more complex tasks online, according to the Fannie Mae release.

“The survey’s findings come at a time when traditional banks and financial institutions face increasing competition from start-ups and established Big Tech (e.g., Google, Amazon, Apple, and Facebook),” Fannie said. “These new entrants are looking to offer financial services and are often credited with offering dazzling consumer digital experiences significantly better than those of traditional banks. Given the digital and customer experience prowess and resources of Big Tech firms, they may be especially well-situated to compete against traditional financial institutions.

“To better understand what consumers think about Big Tech’s arrival into retail financial services, we used the NHS to gauge how Americans feel about their experiences with primary banks and their thoughts on obtaining financial services, including mortgages, from Big Tech firms,” Fannie added.

Among their primary findings were:

• Less than half of Americans are “very likely” to recommend their primary bank or institution, and most remain customers because of convenience and trust;
• Americans reported that their primary bank’s online interface is easy to use and has most or all of what they might want;
• Many prefer performing simple tasks online, such as depositing money and paying bills, and are less comfortable performing more complex tasks online, including applying for a mortgage; and
• Of those who make mobile payments, approximately one-third use Big Tech payment services.

“A small share of Americans trusts technology companies with their money. However, when thinking of their favorite technology company (to which respondents overwhelmingly named the aforementioned Big Tech companies) they’re more likely to trust that particular Big Tech company to handle their financial activities, including mortgages,” Fannie said. “Our survey results show that a majority of consumers regularly use online banking, and they generally say that their bank’s online interface is easy to use and does what they want. At first glance, the primary bank’s digital experience is a relatively good one. However, most consumers primarily perform simple banking tasks online, with most still preferring to complete more complex tasks, such as dispute resolution and applying for a mortgage, with people, either in person or on the phone.”

The Fannie release also suggests that Big Tech firms excel at the online digital experience in ways that most banks do not currently, and they are increasingly experimenting with fulfilling their consumers’ financial needs.

For example, the organization said, one-third of those using mobile payments today engage with a Big Tech firm by using its third-party payment websites and apps. There are multiple ways for Big Tech firms to compete with traditional banks in consumer finance, including using their digital prowess to move online more of the complex and costly experiences that consumers today prefer to do via personal interaction, and in ways that offer a better overall experience.

“The situation is not all rosy for Big Tech. Recent consumer data breaches and privacy issues have negatively impacted consumer trust of the corporate giants, potentially giving traditional banks breathing room to gain ground on the digital front,” Fannie said. “Our survey results, perhaps surprisingly, show that only about 20 percent of consumers would trust their favorite tech firm with their financial activities. However, our prior research also shows that a majority of recent homebuyers have some interest in a fully digital mortgage.

“Now is the time for banks to step up their digital game and, more specifically, to consider how to best digitize more complex financial tasks before Big Tech does.”