Consumers are increasingly turning to digital banking, with banks needing to ensure they offer strong products to compete, a new study has found.

The new research from data security company Entrust explored disruptions on the financial services industry.

In its report, the company explored how new fintechs, challenger banks and new technologies such as cryptocurrencies and contactless payments are creating competition for traditional players.

In particular, the report focused on how these changes are affecting consumers.

The company’s survey of 1,350 consumers found that currently 88% of respondents said that they prefer to do their banking online. For the UK, this broke down to 59% using an app on their phone or tablet, and 27% on their web browser.

However, while digital is largely the preferred way to interact with a bank, 70% of respondents said they’ve used an interactive teller machine in the past year.

Entrust noted that the growing preference for ways to interact with banks online means that companies need to ensure they offer digital services. Furthermore, the addition of new fintechs means that the organisations need to ensure their offerings are high quality to compete.

This was demonstrated when 64% of people said that online banking capabilities was among the most important factors when choosing a bank. 54% listed mobile app availability as a factor as well.

However, when it comes to deciding whether to change banks, the most popular factor was lower recurring fees, chosen by 44% of respondents.

Security was another important factor in deciding which bank to go with, chosen by 36% of people.

However, the increasing digitisation of banking raises security concerns with consumers. The survey found that 90% of people were concerned about the potential of banking or credit fraud.

An addition 42% said they had received notifications of a personal banking or credit fraud incident in the past 12 months.

This damages consumers’ faith in their banks, with 67% changing banks as a result.

The report also found that while 80% of banks offer username and password protection, few offer more advanced protections. 43% offers two-factor authentication, 38% offer fingerprint recognition and 27% offer facial recognition.

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As such, Entrust warned that most banks are offering only the most digital basic protections.

With cybersecurity a growing issue, increasing protection provides a way to distinguish digital banking products. It is also important to ensure that these measures are well communicated to consumers to assure them their money is in good hands.

Vice president of product marketing at Entrust Jenn Markey said: “This study highlights how more than ever, consumer banking is about digital interactions first, and that they must create that digital experience with security at its foundation.

“Our study found both an overwhelming preference for online banking and a significant concern about fraud – in fact, more than two-thirds of consumers in our survey changed their bank or credit union after receiving a fraud or privacy alert. It’s clear that financial institutions must meld rich digital experiences with proven security measures such as biometric security solutions to increase consumer trust and loyalty.”

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