TRUST IN FINANCIAL TRANSACTION PROVIDERS A qualitative study of Swedish Millennials and the trust they place in banks and alternative financial transaction providers. ALEXANDER BANNINK OLIVER WYMAN School of Business, Society and Engineering Program: Master of Science in Business Administration with Specialisation in International Marketing Course: Master Thesis in Business Administration Course code: EFO704 Supervisor: Konstantin Lampou Co-assessor: Peter Dahlin Date: 02-06-2016 Abstract Purpose: Firstly, to investigate if the decline of trust in traditional financial transaction providers, namely banks, has resulted in an increase of trust in Alternate Financial Transaction Providers (AFTP). Secondly, to identify antecedents to building trust in AFTP held by Swedish Millennials. Methodology: Qualitative research consisting of focus groups were used to collect primary data. A total of three focus group were held, excluding a trial session. Participants in the focus groups were Swedes between 22 and 30 years of age (Swedish Millennials). Findings: That trust in banks amongst Swedish Millennials is decreasing. Concurrently, there is a general willingness of Swedish Millennials to trust AFTP given the presence of certain antecedents (human, technological and organisational). Keywords: Antecedents, Alternative Financial Transaction Providers, Banks, Financial Technology, Peer to Peer, Swedish Millennials, Trust Acknowledgement The authors would like to acknowledge and thank all the participants who gave their time during the data collection stage of this study. Without their contribution it would not have been possible to glean new insights on an exciting topic. Special thanks are also conveyed to the author’s peers and the teaching staff of Mälardalen University. i Table of contents Figures and Tables .................................................................................................... iii Abbreviations ............................................................................................................. iii 1. Introduction ............................................................................................................. 1 1.1 Background ............................................................................................................................................. 1 1.2 AFTP Explained .................................................................................................................................... 3 1.2.1 P2P Lending ................................................................................................................................... 3 1.2.2 P2P Transfers ................................................................................................................................. 4 1.3 Research question .................................................................................................................................. 5 1.4 Purpose .................................................................................................................................................... 5 1.5 Outline ..................................................................................................................................................... 5 2. Literature Review ..................................................................................................... 6 2.1 Trust ......................................................................................................................................................... 6 2.1.1 Trust in General ............................................................................................................................. 6 2.1.2 Models on Trust ............................................................................................................................ 7 2.2 Propensity ............................................................................................................................................... 8 2.3 Trust in Banks ........................................................................................................................................ 9 2.4 Trust in Innovative Technology ........................................................................................................ 10 2.5 Millennials ............................................................................................................................................. 10 2.6 Conceptual Framework ...................................................................................................................... 11 3. Methodology .......................................................................................................... 15 3.1 Empirical Data Collection .................................................................................................................. 15 3.1.1 Operationalisation ....................................................................................................................... 15 3.1.2 Sampling ........................................................................................................................................ 16 3.1.3 Focus Groups .............................................................................................................................. 16 3.1.4 Focus Group Guide .................................................................................................................... 17 3.2 Data Analysis ........................................................................................................................................ 18 3.3 Reliability and Validity ........................................................................................................................ 18 3.3.1 Reliability ....................................................................................................................................... 18 3.3.2 Validity .......................................................................................................................................... 18 3.4 Limitations ............................................................................................................................................ 19 4. Findings & Analysis ............................................................................................... 20 4.1 Propensity ............................................................................................................................................. 20 4.2 Banks ..................................................................................................................................................... 21 4.3 AFTP ..................................................................................................................................................... 22 4.4 Antecedents .......................................................................................................................................... 23 4.4.1. People ........................................................................................................................................... 23 4.4.2 Technology ................................................................................................................................... 24 4.4.3. Organisation ................................................................................................................................ 26 5. Conclusions ............................................................................................................ 28 6. Recommendations ................................................................................................. 30 6.1 Managerial Recommendations ........................................................................................................... 30 6.2 Recommendations for Further Research ........................................................................................ 30 References .................................................................................................................. 32 Appendices ................................................................................................................ 36 ii Figures and Tables Table 1. P2P lending versus term deposit with a bank ................................................................. 3 Table 2. P2P transfer versus bank transfer .................................................................................. 4 Figure 1. Model of Trust (Mayer et al., 1995). ............................................................................. 7 Table 3. Antecedents to trust ................................................................................................... 12 Figure 2. Designed model on trust (own work, 2016) ................................................................ 14 Table 4. Methodology timeline ................................................................................................. 15 Abbreviations AFTP Alternative Financial Transaction Providers EC Electronic Commerce EPS Electronic Payment Systems Fintech Financial Technology P2P Peer to Peer iii 1. Introduction 1.1 Background There has been widespread change to the way consumers perform financial transactions in recent years. Emerging technologies and processes have made it possible for businesses and consumers to interact with each other in new ways. Changes in these interactions have been more apparent in some countries than others.