With such a notoriously competitive environment, customers are now acutely aware of the benefits switching can provide and how many alternate lenders are available. As a result, they’re placing heightened importance on ethical behavior in the sector.
A recent study from Insider Intelligence has revealed that more than half of customers in the UK would switch to a different bank if their current lender was caught laundering cash.
In particular, the study has revealed that young customers would be most likely to make the switch if their lender was involved in money laundering. Over two-thirds (64%) of 18- to 24-year-olds would switch, as would 68% of 25- to 34-year-olds.
However, the study contrasts with previous research, which has suggested that many banks choose to incur money laundering fines as a cost of doing business. After all, other surveys have shown that more than a third of firms choose to incur AML fines and violations ‘all the time’.
At present, banks that are found to have laundered money must contend with both financial and reputational damage. For context, in December 2021, one British bank was fined £264.8 million ($364.2 million) when it was involved in a money laundering case that involved cash being stuffed into bin bags.
At present, trust in banks is low. According to a survey from Opinium, almost one third (28%) of adults don’t trust high street banks, with this figure rising to 38% of 25- to 34-year-olds. Banks risk eroding this trust even further if they adopt a lax approach to money laundering regulations. As a result, it’s vital that they employ effective regulatory controls, strong risk management procedures, and maintain an ethical culture. If not, they will alienate customers who will switch lenders.
On top of this, banks must be aware that it’s now easier than ever for customers to switch banks (current account switching is up 41% annually in the first quarter of 2022). With such a notoriously competitive environment, customers are now acutely aware of the benefits switching can provide and how many alternate lenders are available. As a result, they’re placing heightened importance on ethical behavior in the sector.
If your bank would like to fight financial crime and ensure compliance with AML and KYC regulations, then our end-to-end anti-money laundering compliance solution can help you.
As well as helping to show regulators that you take financial crime and compliance seriously, we can also help you verify the identity of your customers, screen them against PEP and sanctions watchlists, check for adverse media, and provide ongoing monitoring.
To discover more about how we can help you, talk to us today.