trending Market Intelligence /marketintelligence/en/news-insights/trending/ULezWBqIC5GYmlvNiw7O_Q2 content esgSubNav
In This List

Millennials valuing convenience over security are in for a shock, says RBS exec

Podcast

Street Talk Episode 87

Blog

A New Dawn for European Bank M&A Top 5 Trends

Blog

Insight Weekly: US banks' loan growth; record share buybacks; utility M&A outlook

Blog

Banking Essentials Newsletter 2021: December Edition


Millennials valuing convenience over security are in for a shock, says RBS exec

Millennials who prioritize convenience over security in their use of payments and other fintech products are in for a rude awakening due to the growing risk of data breaches, Royal Bank of Scotland Group Plc's head of innovation engineering, Richard Crook, said.

"Millennials will use Paypal over a bank transaction for convenience, even if it's less secure," he said during a panel discussion at the FT Banking Summit in London. However, the risk of data leaks may cause younger consumers to re-evaluate their priorities, he added.

"The type of data leaks we are seeing now is nothing compared with what is to come. From a bank's perspective, security is more important than convenience. The younger generation will eventually come to know what it is like to lose money."

Fintech capabilities

Banks can promise trustworthiness to consumers in a way that fintechs cannot, he said, adding that fintechs may also start shying away from offering services that banks and major credit card companies have previously provided when they recognize how burdensome regulation can be.

"When banks saw that fintech Ripple Labs was hit by a fine for failing to comply with anti-money-laundering regulations, their reaction was 'welcome to the club,'" he said.

In a landmark case for the fintech industry, payments company Ripple Labs was fined $700,000 in the U.S. in 2015 for neglecting anti-money-laundering controls.

But Jürgen Rigterink, CEO of FMO-Dutch Development Bank, hit back at the suggestion that fintech and payments companies are inherently less secure than incumbent banks, saying they may be more capable of using technology such as blockchain than traditional lenders.

"I don't think it's a question of trading security for convenience," he said. "I actually think that fintech companies will be more, rather than less, secure."

Blockchain can help banks to operate in markets where verifying the identity of clients can be a challenge, according to Rigterink. "If blockchain had been around five years ago, I don't think that Barclays Plc would have left Africa," he said.

Barclays sold down its stake in Barclays Africa Group Ltd. earlier in 2017. The bank also pulled out of its remittances business, which served thousands of retail customers in Africa, in 2013, as the result of concerns over security and money laundering.