Whose Customers Are Most Concerned With Fraud? Traditional Banks vs. Neobanks

It is a scenario that everyone dreads: logging on to your online bank to find that your account has been drained of funds by a fraudster. This is undoubtedly and rightly a concern for customers and many spend time online researching and seeking to understand the risks of fraud. There are some positives to this, as staying up to date with the latest scams is a great way to avoid falling victim, but the high incidence of searches by reference to a specific institution is a potential cause for concern, pointing to a perception amongst customers that their money is simply not safe with their chosen bank.

We at BanklessTimes.com believe there is a marked difference in that perception between customers of traditional banks and customers of neobanks, and we have delved into the online search volumes to see which of the two exhibits the greatest level of concern about falling victim to fraud.

Traditional Banks

During 2022, the UK lost a staggering £1.2bn to fraud, which equates to £2,300 falling into the hands of fraudsters every single minute. While banks are legally obliged to refund unauthorised transfers, that obligation does not extend to payments that technically have been authorised by the customer – for example, where the victim is tricked into agreeing to send the money. As a result, only 59% of fraud-related losses were reimbursed during 2022, leaving hundreds of thousands of customers out of pocket.

The traditional brick and mortar high street banks remain popular with UK customers, but that popularity does not equate with universal confidence in the safety and security of customers’ money. We have looked at the five biggest traditional banks and have found that each has, on average, 1,700 customers every month searching for its name in connection with fraud:

Barclays

Barclays customers have proved to be those most concerned about fraud on their accounts, with an average monthly search volume of 2,400. The reason for this is unclear, but is plainly a concern for Barclays, which has recently teamed up with UK Finance and is urging its customers to follow three steps to prevent fraud. These are: (i) stop and think before you hand out personal information, (ii) challenge, refuse or reject any requests that you think look fake, and (iii) report any scams to Action Fraud or, if you’re in Scotland, to the Police.

NatWest

With 1,900 average monthly searches, NatWest customers show a similar concern about fraud. Part of the explanation for this may rest in negative press surrounding NatWest’s internal control processes, and in September 2021 the bank became the first financial institution to face charges under the Financial Conduct Authority anti-money laundering laws after admitting that it failed to prevent money-laundering of nearly £400m by one firm.

Santander

Santander has 1,600 average monthly searches for fraud and, like NatWest, has attracted negative publicity around its security measures, having been fined more than £100m after the Financial Conduct Authority found serious and persistent gaps in its anti-money laundering controls. These controls affected more than 560,000 business customers, making up 4% of its UK client base.

Halifax

There were 1,300 average monthly searches for fraud involving Halifax, and the bank’s customers have been recently targeted by an email scam asking victims to update their account information. Victims are then duped into logging onto a near identical version of the Halifax home page and before being prompted to enter personal information, straight into the hands of the scammers. To avoid falling victim, ensure that you check any emails for red flags, such as email addresses that do not exactly match Halifax’s domains, and avoid clicking on any links.

Nationwide

Nationwide also saw an average 1,300 average monthly searches for fraud, and it has recently launched a scam checker service for customers who are worried about the security of any electronic payments. Any customer using the service who ultimately falls victim to a scam is guaranteed a refund of their money, provided Nationwide has not warned the customer not to proceed.

Neobanks

With David Postings, the head of UK Finance, announcing that the majority of fraud starts online, are those who have switched their traditional account for a neobank more concerned about falling victim to fraud? Our findings in fact indicate quite the opposite: on average across the five most popular neobanks, there are only 224 monthly searches for fraud – six times lower than the average for traditional banks.

Monzo

Monzo customers are most likely to search for fraud, with an average of 590 monthly searches. Despite topping the charts amongst the neobanks, the figure is less than half the number of searches made by customers Nationwide and Halifax, and a quarter of the searches made by customers of Barclays. Monzo became a fully-fledged bank in 2017 and now has almost 8 million customers, but it wasn’t until February 2023 that it first achieved profitability. Monzo customers are in complete control over their security measures and can protect their accounts with touch ID, face ID, fingerprint and PIN controls.

Revolut

Revolut is one of the largest neobanks, boasting a customer base of some 30 million, but has an average of just 390 monthly searches for fraud. The bank has recently launched a sophisticated AI feature which can detect if a customer is being scammed, and then break the spell of the fraudster before any money changes hands. The customer is then protected from making any similar payments and directed to a scam intervention flow-in app, which provides them with educational stories and prompts them to think in-depth before making the payment. This feature has already resulted in a 30% reduction in fraud losses from card scams.

Starling

Starling has just 70 monthly searches for fraud, suggesting that its customers feel that their money is in safe hands. The reason for this may well be down to the powerful security measures that have been put in place by Starling, from having to provide video ID when opening an account to the biometric login ID and real-time payment notifications.

Cashplus

Like Halifax customers, holders of Cashplus accounts have recently been targeted by email scams and are being advised to double-check any emails that appear suspicious and to avoid clicking on links. With just 50 monthly searches for fraud, it is safe to say that Cashplus customers are not overly concerned about being targeted.

Monese

With an average of 20 monthly searches, Monese showed the lowest incidence of searches for fraud, 120 times less than Barclays. With less than two searches a month, Monese urges anyone who believes they may have been the victim of fraud to first use the app to lock their card, before contacting their support team through the in-app chat. In the UK, you should also report the situation to Action Fraud.

Neobank Customers Are Typically More Tech Savvy

There is undeniably a huge gulf in the level of concern over fraud between users of traditional banks and users of neobanks, and this cannot be explained away by high street banks having more customers: NatWest, for example, has significantly fewer account holders than Revolut, but sees five times as many fraud searches.

The reasons are likely to be threefold. First and most obviously, those who choose neobanks are typically more tech savvy, familiar with the world of online banking, and already know what to look out for when it comes to online scams.

Second, neobanks, also known as challenger banks, have an outstanding reputation for high levels of customer services, with a customer-centric approach being integral to their business model. Neobanks offer cutting edge support through digital platforms, including mobile chat, online chat, email or social media, so customers who feel they might be at risk can access immediate and real-time support from a specialist team, and do not have to resort to researching the position themselves while sitting on hold for an hour waiting to get through to the right department of a high street bank.

Finally, Ryan Matthews, technology expert at Bankless Times believes that neobanks are simply better at instilling confidence by deploying cutting-edge anti-fraud technology:

“The leading neobanks need to set themselves apart from their brick and mortar competitors and have invested heavily in the latest technology, including biometrics and AI fraud detection. It is no surprise that their customers tend to feel that their money is in safe hands”.

Ryan Matthews, Technology Expert at Bankless Times

Methodology

We took five banks from a YouGov poll of the most popular consumer banks in the United Kingdom. We then used Google Keyword Tool to determine how many times consumers were searching for the bank’s name followed by the word “fraud”. We followed the same procedure for neobanks, taking the most popular neobanks from Statista.

In order to determine the average search volumes for both traditional banks and neobanks, we added together the total search volumes for each of the banks in each section and divided the resulting figure by five.