Challenger banks are strongly associated with financial empowerment, but also twice as likely to be associated with security and privacy concerns compared to traditional banks.
Meanwhile, traditional banks retain strong associations with trust, a wider range of services and perks such as loyalty programs.
These are two of the key findings from a new report by The Economist Intelligence Unit (EIU), commissioned by Temenos, based on an analysis of more than 10 million online conversations in public forums about personal finance.
The report, titled ‘Customer experience: learning from online personal finance conversations', reveals the strengths and weaknesses of traditional and challenger banks in terms of how well they are meeting customer needs.
According to the EIU report, start-up, digital first banks and investment services have come to market promising superior customer experience and innovative services, such as budgeting apps and automated, low-cost investment tools.
However traditional banks still benefit from trust, reliability and a wider range of services. In addition, spurred on by new digital entrants, they are increasingly investing heavily in their digital capabilities.
In an earlier EIU global survey, a third (32%) of banking leaders stated that improving customer experience and engagement was their bank's top strategic priority.
The analysis found that 13.7% of conversations about challenger banks included associations with concerns about safety, security or privacy, compared with only 6.7% of those about traditional banks.
Discussions about investment have grown in frequency since 2015, and the analysis shows that 14.4% of conversations that discuss challenger banks include associations with financial empowerment capabilities such as tracking and budgeting, compared with just 2% of conversations that discuss traditional banks.
However, while many consumers are turning towards disruptive fintech platforms for enriched tools and services to bolster their personal finances, traditional banks remain heavily associated with rewards and loyalty programs one of the most discussed subjects overall.
A quarter (24.9%) of conversations about traditional banks were related to credit cards or reward programs, compared to just 2.4% of those involving challengers.
The report also notes that the field of financial services is far bigger than before, with open banking allowing third-parties to build innovative financial products and assist customers in many aspects of their financial lives.
This could see fintech become ubiquitous in areas far beyond core banking services, the report states.
Finally, the analysis shows incumbents and challengers are only associated with 18% of total personal finance discussions, with the rest covering everything from divorces and wills to car buying.
Temenos CEO Max Chuard says, "The new report, which analyses online conversations, reveals that in the battle for consumers, challengers and incumbent banks will need to meet customers demands for financial empowerment, enhanced digital experiences as well as safety and security.
"We see digital technology as a once-in-a-generation opportunity to deliver satisfying and secure customer experiences and generate growth for banks."
"The transformative power of cloud and AI technology gives banks a fighting chance in the campaign for customer relationships, but time is of the essence," he says.