Key takeaways
- 96% of the 1,023 UK respondents expect onboarding requirements to be clearly explained, and 96% expect clear context when a payment is stopped.
- 88% would consider switching providers if their bank were reported to have failed in preventing money laundering or terrorist financing, and 83% would consider switching after news of a major fine.
- 87% would discourage friends or family from using a financial institution linked to financial crime violations.
- 88% trust their provider to prevent money laundering and sanctions breaches, yet 80% would consider moving if financial crime checks caused repeated inconvenience.
- A smooth payment process (75%) and clear communication during checks (68%) are the top drivers of customer retention.
Executive summary: trust as a growth metric
In 2026, the UK financial services landscape has reached a critical inflection point where compliance performance and customer retention are now inextricably linked. Findings from the ThetaRay UK Banking & Fintech Trust Report 2026 indicate that for CEOs, COOs, and Risk Officers, the back-office function of financial crime prevention has moved to the front lines of brand equity and franchise value.
The new trust mandate
Trust is no longer a static sentiment but an operational outcome. UK consumers now judge institutions based on three non-negotiable pillars:
96%
demand clear explanations of onboarding requirements, signaling that ambiguity is now viewed as a failure of institutional control
88%
would consider switching providers following reports of AML or sanctions failures, a concern that outweighs the impact of financial penalties alone
80%
would walk away if security measures caused repeated inconvenience or unexplained friction, even though 88% trust their current provider's compliance efficacy
Strategic implications for leadership
The report highlights a shifting regulatory and competitive environment that demands a transition from legacy systems to intelligent, explainable AI:
- Retention is built on performance: reliability and clarity are the primary drivers of loyalty. Smooth payment processes (75%) and clear communication (68%) are the top factors influencing customer retention.
- Regulatory stakes have escalated: the FCA's Consumer Duty and Operational Resilience frameworks have turned "poor communication" and "systemic friction" into reportable compliance breaches.
- The wealth influence effect: older demographics (60 and older), who control over 52% of total financial assets, exhibit the highest scrutiny regarding security and institutional integrity.
Call to action: operationalizing trust
To thrive in this low-friction switching economy, financial institutions must bridge the gap between rigorous compliance and seamless experience:
- Modernize controls: shift to adaptive, risk-based AI systems that reduce false positives and customer friction.
- Make communication a control: embed clear, automated context for every transaction stop or information request to satisfy both the customer and the FCA.
- Ensure AI explainability: align with the UK government's AI Roadmap by deploying models that are transparent, auditable, and governed by human oversight.
Strategic bottom line
In 2026, the institutions that define the market will be those that treat compliance not as a cost center, but as a trust accelerator.
Foreword
Dear compliance and risk leaders,
In 2026, the mandate for UK financial services has shifted: trust is no longer a soft brand sentiment but a measurable, operational KPI. With the FCA's Consumer Duty and Operational Resilience frameworks now firmly embedded, regulatory scrutiny has moved beyond mere process toward a strict focus on outcomes, transparency, and the accountability of AI-driven decision making.
This year's ThetaRay UK Banking & Fintech Trust Report reveals a critical alignment between regulatory enforcement and consumer sentiment. Our data shows that high-level policy goals have become baseline customer demands.
- The accountability mandate: 88% of UK consumers would actively consider switching providers following a reported failure in AML or terrorist financing prevention.
- The transparency threshold: 96% of respondents demand absolute clarity during onboarding. For these customers an unexplained delay or a "black box" rejection is no longer seen as a service flaw but interpreted as a failure of institutional control.
- The retention risk: beyond regulatory fines, 80% of your customers will walk away if security measures cause repeated, unexplained inconvenience.
The message for the C-suite is unmistakable. Compliance performance is now a primary driver of customer loyalty. In a market where the FCA demands explainability and human oversight of high-risk AI systems, being compliant in the back office is insufficient if it creates friction in the front office.
At ThetaRay, with more than a decade of proven success in deploying AI, we believe that rigorous financial crime prevention and a seamless customer journey are not opposing forces but reinforcing ones. Operational excellence, driven by intelligent, explainable AI, is the only way to meet the dual pressure of intensifying AML supervision and rising consumer expectations for speed and fairness.
This report provides the roadmap to operationalizing that balance, turning regulatory readiness into lasting customer trust.
Garima Chaudhary, SVP Product, ThetaRay
Methodology
This research combines primary consumer survey data from banking clients, aligned with relevant facts and recent findings from regulators and industry experts to ensure relevance for financial crime, risk, and compliance decision-makers.
The survey included 1,023 respondents across the UK. Participants were asked 16 structured questions, including multiple-choice formats, Likert-scale assessments, and one "select all that apply" question, designed to capture perceptions of trust, performance, and risk management in the financial services sector.
To strengthen interpretation, the analysis incorporates facts and findings from regulators, supervisory authorities, and recognized industry experts. These insights are used to contextualize and validate the themes emerging from the survey, ensuring alignment between consumer sentiment and the regulatory, operational, and technological realities facing banks and fintechs today. External references are applied selectively and only where they directly support patterns observed in the survey data.
Demographic distribution
The respondent sample is well distributed across age groups, with a slight concentration in the 65+ age group, representing 19% of participants. This group is broadly comparable in size to the 24-34, 35-44, and 45-54 cohorts, while the 55-64 group is the smallest at 16%.
This distribution is particularly relevant for financial crime and compliance analysis. Older demographics typically control a disproportionate share of financial assets and are therefore central to both retail banking profitability and risk exposure. Individuals aged 60 and above hold more than 52% of total household financial assets in developed markets [1]. They often tend to exhibit higher financial literacy, and a more cautious approach to risk and security.
Overall, the balanced demographic spread provides a reliable view into how asset-rich and digitally active customers are the most influential in shaping trust expectations, compliance scrutiny, and long-term institutional resilience, and how they perceive the banking and fintech sectors.
First look: trust in the UK banking & fintech landscape
Trust in UK financial services continues to rest on familiar but increasingly demanding foundations: clear communication, efficient onboarding, and integrity. The survey results confirm that these fundamentals remain central to consumer decision-making and long-term loyalty, particularly in a market undergoing rapid digital and regulatory change.
As digital banking and fintech continue to reshape the UK financial ecosystem, the 2026 ThetaRay UK Banking & Fintech Trust Report shows that customers consistently prioritise clarity, transparency, and strong compliance over novelty or speed alone. Trust, for most consumers, is not driven by innovation in isolation, but by confidence that institutions understand their obligations and communicate them clearly.
High-street banks remain the trust anchor
Despite the proliferation of digital alternatives, 68% of respondents still rely primarily on high-street banks as their main financial provider. This reinforces the continued dominance of major commercial banks based in the UK in core financial relationships, even as customers adopt digital tools and services alongside them.
This pattern mirrors global trends, as industry data shows that 83% of banking customers worldwide still maintain accounts primarily with traditional institutions [2] due to perceived stability of physical branches, regulatory oversight, and a reassurance of established brands. However, the UK stands out as a first-adopter market: while trust remains concentrated in traditional banks, adoption of digital banking services is notably higher than in many peer markets. This positions the UK as a test bed for new financial technologies and a bellwether for how trust evolves in hybrid banking models.
Executive Insight for CEOs
In a market where reputation moves faster than regulation, trust has become a C-level KPI. How banks explain decisions, protect customers, and demonstrate accountability now directly influences franchise value, regulatory posture, and customer retention.
Transparency as the core trust currency
Transparency emerges as the single most important driver of trust. This expectation is particularly acute in the UK, where consumer protection and fairness are central regulatory themes, such as the FCA's Consumer Duty.
Clarity around data handling and AI is especially critical. While banks remain among the most trusted custodians of customer data, a growing gap exists between trust in institutions and comfort with advanced analytics. A banking consumer study from Accenture highlights the paradox: 84% of customers express concern about data usage, even as personalisation and automation expand. Inconsistent explanations around data and AI materially increase churn risk, particularly among Gen Z demographics.
AI, customer experience, and the compliance imperative
As AI becomes embedded across onboarding, monitoring, and customer interaction, explainability has become a trust signal. Digitalization has improved efficiency, but it has also reduced the sense of personal engagement. Institutions that succeed in rebuilding customer advocacy, not just loyalty, will be those that combine personalization with transparency and clear accountability.
Compliance plays a decisive role here. Financial crime controls, transaction monitoring, and customer screening are no longer invisible back-office functions. Failures in these areas increasingly translate into consumer harm, reputational damage, and regulatory intervention. With more than $9.7 trillion worth of trade flows exposed to non-compliance risk, regulators are intensifying expectations around documented controls, governance, and auditable decision-making.
Fintech usage: complementary, not primary
The survey also shows that digital-only banks (16%) and hybrid usage of banks and fintechs (12%) represent a meaningful but still secondary share of primary banking relationships. Pure fintech platforms (like payment apps and digital wallets) are used by a minority (4%) as a primary financial institution. This indicates fintech services are typically additive rather than substitutive, supporting specific use cases while core banking trust remains with traditional institutions (see Q1 above).
UK regulation raises the stakes
These findings come at a critical moment for UK financial services. The Financial Conduct Authority (FCA) strengthened its Consumer Duty enforcement, demanding outcome-focused communication, fairness, and transparency at every customer touchpoint. Meanwhile, evolving UK AI governance and the emergence of pan-European AML supervision are reshaping expectations around how technology is deployed, explained, and controlled.
For UK banking and fintech leaders, these shifts make trust not just a brand asset but a regulatory necessity. Trust is now operational, measurable, and increasingly enforceable, sitting at the intersection of customer experience, AI adoption, and financial crime compliance.
Survey results: the customer journey is the trust test
The customer journey is no longer a user-experience (UX) challenge. In the UK market, it has become a compliance benchmark and a primary driver of trust. This is most evident at the very first interaction: account opening.
The survey findings show near-unanimous expectations around onboarding transparency. 96% of respondents expect onboarding requirements to be clearly explained, with 61% strongly agreeing and 35% agreeing. This level of consensus leaves little room for interpretation. For UK consumers, clarity at onboarding is no longer differentiation, but baseline expectation.
The data also signals low tolerance for friction or ambiguity. Customers increasingly view unclear, overly complex, or poorly explained onboarding requirements as grounds for disengagement or abandonment. The absence of meaningful disagreement, and the minimal neutral minority further underscore that transparency and clarity at this stage is directly linked to trust and willingness to proceed.
Technology, speed, and regulatory friction
UK fintechs have set new expectations by deploying selfie video verification, liveness checks, and AI-driven document authentication to enable near-instant identity validation. Many banks now use similar tools, but legacy systems and layered compliance processes often require manual reviews, resulting in delays, or inconsistent customer communication.
This divergence has material implications. While fintechs optimize for speed and clarity, banks must balance automation with regulatory assurance, yet from the customer's perspective, the expectation remains the same: requirements must be clearly explained, proportionate, and justified.
Under the FCA's Handbook of Rules and Guidance, institutions must provide evidence that onboarding communications are clear and comprehensible. With 96% of consumers demanding explicit guidance, this expectation now defines compliance as much as it does experience.
Executive Insight for CCOs
The customer journey presents a series of regulatory exposure points. Every unclear or delayed interaction during onboarding can translate into measurable compliance and attrition risk.
Onboarding as a risk signal
The customer journey represents a series of regulatory exposure points, not a linear UX flow. Every unclear instruction, unexplained delay, or opaque decision during onboarding increases both attrition risk and compliance risk.
In an environment shaped by the FCA's Consumer Duty, onboarding has become an early indicator of whether a firm is delivering good outcomes. A significant number of respondents (70%) believe that the time it takes to complete onboarding directly influences their decision to either continue or abandon the process. This highlights a clear need for financial institutions to streamline and optimize their onboarding procedures to reduce friction and minimize customer churn.
Industry research supports this finding. According to a Digital Onboarding Report, 68% of European consumers have abandoned a financial application due to lengthy onboarding processes [9].
Executive Insight for CCOs
The longer a customer waits for verification, the more likely they are to abandon the process. Automatic documentation checks and ID verification can directly reduce churn, cost-to-serve, and compliance backlog.
While UK banks can onboard a customer and open an account while the final verification steps remain outstanding, they too must conform to a series of controls regarding anti-money laundering (AML) and know your customer (KYC), and a limited period of 10 days to complete the application and either open the account or refuse the customer. Automated compliance reduces the manual workload and provides a competitive edge in terms of customer certainty and convenience.
These stringent documentation checks are not optional: AML regulations require banks to perform thorough due diligence and follow rigorous processes to prevent financial crime. There is no escaping these legal requirements; however, the way institutions implement them can vary significantly.
Traditional onboarding processes can lead to frustrating delays for customers and higher abandonment rates, while digital, AI-first compliance onboarding solutions can streamline verification and reduce the time from days to minutes. This urgency aligns with new FCA expectations that firms demonstrate efficiency without compromising due diligence. In 2025, industry benchmarks suggest that leading UK banks are now deploying digital onboarding powered by AI that reduces onboarding times by up to 80% [10], leading to a significant improvement in customer satisfaction and conversion rates, while maintaining full AML compliance.
For UK banks and fintechs alike, onboarding is no longer where trust begins. It is where trust is tested, measured and enforced.
The power of clear communication
UK customers have exceptionally high expectations for clarity, transparency and fairness, especially when financial institutions request additional information or intervene in transactions for security or compliance reasons. In this survey, an overwhelming 95% of respondents said they expect information requests during ongoing customer review to be clear, reasonable, and well-explained. Around the same proportion (96%) also expect a clear explanation when a payment or transaction is stopped.
The significant level of consensus indicates that customers increasingly interpret onboarding-related friction, such as enhanced due diligence (EDD), KYC refresh requests, or transaction intervention, not as an inconvenience, but as a moment where institutions must demonstrate competence and integrity. When explanations are unclear or inconsistent, customers are more likely to assume operational weakness, unfair treatment, or poor governance.
Industry research supports this dynamic. The World Retail Banking Report found that financial institutions are struggling to close the conversion gap due to weak value propositions and insufficient customer insights. In practice, this "conversion gap" often emerges at the very points where trust is most fragile: onboarding, verification, and compliance-driven interactions. When a customer's trust is on the line, providing clear context and guidance is a non-negotiable part of maintaining a strong relationship.
Critically, clear communication is now a compliance necessity. Under the FCA's Consumer Duty, unclear or inconsistent messaging is a potential regulatory breach, not just a customer experience issue.
A majority of respondents "Strongly agree" (57%) or "Agree" (38%), and only 0.3% strongly disagree. This response is consistent with other communication-related questions in the survey. Under the FCA's Consumer Duty, firms must demonstrate that communications are not misleading and enable informed decision-making.
Executive Insight for CEOs
Every customer message linked to financial crime controls, whether a request for source of funds, a verification prompt, or a blocked transaction notice, must be treated as both a trust moment and a regulatory exposure point.
Clear communication is now the baseline requirement for maintaining trust in an AI-enabled, compliance-heavy banking environment. In today's UK market, poor communication is no longer perceived as a service flaw; it is interpreted as a failure of control.
Transparency in transaction checks is paramount
When a transaction is halted, whether due to fraud prevention or sanctions screening, customers experience immediate panic that the transaction hasn't gone through. In those moments, communication becomes the trust mechanism. The survey results show near-unanimous demand for transparency: 96% of respondents expect clear context and clear next steps if a payment or transaction is stopped for compliance or sanctions checks (66% strongly agree, 30% agree). Only 4% remain neutral, and none disagree.
This finding is critical because a stop-payment is not a routine service interaction, it is a high-stakes disruption. Customers are willing to tolerate intervention, but they expect the institution to explain the "why" in plain language and provide a clear, actionable path to resolution. Without that clarity, friction quickly becomes suspicion, and is perceived as arbitrary or unfair.
Transparency is not only a customer expectation but increasingly a regulatory and governance requirement. The FCA and the forthcoming EU AI Act both emphasize explainability, requiring that any AI-driven compliance decisions, such as transaction monitoring or sanctions screening, be interpretable and auditable. Black box AI models risk regulatory penalties for "inadequate controls," hinder fine-tuning, and increase money laundering vulnerability.
However, explainability must be applied with discipline. Institutions must provide meaningful transparency to customers and regulators without disclosing operational thresholds or detection logic that could enable bad actors to evade controls.
Executive Insight for MLROs & BSAOs
As AI becomes central to compliance processes, explainability will increasingly define trust. If customers or regulators can't understand why a transaction was stopped, the control itself becomes a liability. Effective financial crime programmes will therefore treat customer-facing transparency not as a soft UX feature, but as an essential layer of operational resilience, compliance integrity, and customer protection.
A Deloitte Insights report indicates that customers are more likely to remain loyal to financial institutions that provide proactive, transparent updates during security incidents. Customers want to be informed and empowered to resolve issues when their financial activities are interrupted, without feeling blamed, ignored, or left in the dark.
Erosion of trust from poor communication
Poor communication erodes trust faster than almost any other operational failure, particularly when customers are asked to respond to onboarding or compliance checks. The survey results show a clear warning signal: 92% of respondents agree that vague requests, unexplained delays, or a lack of context during periodic customer reviews would reduce their trust (51% strongly agree, 41% agree). Only 7% remain neutral, and none disagree.
This finding highlights a critical point for UK banks and fintechs: communication is part of the control environment. A Forbes report stated that 62% of customers lose confidence in a bank after a breach, and 43% stop transacting altogether. A 2025 KPMG report revealed that only 38% of banks prioritized sharing information about new scams. This included both internal dissemination among their teams and external sharing with industry groups, law enforcement, and other financial institutions.
Executive Insight for CEOs
Trust erodes quietly and compounds quickly. In the digital era, a single negative compliance interaction can reverberate through social media and peer networks faster than any traditional recovery plan can respond.
From a risk and compliance perspective, vague communication also creates regulatory exposure. Under the FCA's Operational Resilience rules, firms must demonstrate that communication failures are managed as critical incidents, highlighting their centrality to overall resilience.
The implication is critical: in the UK market, best practice communications provide a reason category (e.g. verification or compliance checks), required steps, expected timeline, and escalation path without disclosing detection logic that could be exploited.
The importance of timeliness in compliance
Timeliness is increasingly a compliance and conduct indicator. The FCA's Non-Handbook Guidance outlines communicating and engaging with customers so that they can make effective, timely and properly informed decisions about financial products and services and can take responsibility for their actions and decisions. This makes speed a reportable indicator of compliance and fair treatment.
This expectation is especially pronounced when a financial institution contacts a customer about a potential transaction concern or suspicious activity check. The survey shows that 96% of respondents expect fair and reasonable timeframes to respond to these requests, including 60% who strongly agree. This is one of the strongest consensus signals in the dataset and indicates that customers have very limited tolerance for delays when their access to funds, payments, or accounts may be affected.
Timeliness matters because compliance checks are high-friction moments: customers may be asked to verify activity, provide documentation, or wait while a payment is reviewed. In these situations, delays are not interpreted as caution. They are experienced as uncertainty, and uncertainty rapidly erodes trust. Slow resolution increases the likelihood of abandonment, escalations, and complaints, while also creating internal costs through operational work.
Executive Insight for COOs and CROs
Timeliness in security workflows is therefore a key resilience metric. It reflects the institution's ability to manage financial crime controls at scale without compromising customer outcomes.
Where responses slip due to manual bottlenecks, alert backlogs, or fragmented systems, the impact is twofold: customers lose confidence, and compliance efficiency deteriorates.
In a market shaped by digital-first expectations and rising fraud pressure, speed is now part of trust. Institutions that can act quickly, communicate early, and resolve security checks efficiently will be better positioned to protect customers, reduce operational strain, and meet regulatory expectations.
The impact of AML and counter-terrorist financing (CTF) failures
AML and CTF performance is no longer viewed by consumers as a back-office compliance issue. It has become a visible measure of institutional integrity, and a powerful driver of customer loyalty and switching behavior.
The survey results show a clear and material risk to customer retention: 88% of respondents say they would consider changing providers if their bank were reported to have failed in preventing money laundering or terrorist financing (51% strongly agree, 37% agree).
This distinction matters. Customers appear to interpret fines as serious but potentially procedural. In contrast, AML/CFT failures are perceived as a direct breach of trust, signalling that the institution may be unsafe, poorly governed, or complicit through negligence. In practical terms, consumers are less forgiving of compliance failures that suggest criminal exploitation of the financial system than of enforcement outcomes framed as "regulatory issues."
This sensitivity is consistent with broader sentiment observed across markets. The ThetaRay US Banking & Fintech Trust Report 2025 revealed that 84% of consumers would consider changing banks after reports of AML failures, reinforcing that reputational damage from financial crime lapses has become a cross-market trust trigger.
Executive Insight for Chief Risk Officers
From an enterprise risk perspective, AML/CFT failures now cascade far beyond regulatory remediation. Regulators, investors, correspondent banking partners, and customers increasingly interpret AML breaches as evidence of governance weakness, not operational error.
Enforcement fines reached over £186 million in 2024/25, up from £42 million the previous year, signalling a sharp rise in overall regulatory penalties under the FCA's enforcement regime. Furthermore, compliance failures are more likely to be treated as leadership accountability issues under the Senior Managers and Certification Regime (SM&CR), intensifying scrutiny of oversight, controls, and decision-making.
For institutions operating across borders, the forthcoming EU AML Authority (AMLA) will introduce additional supervisory expectations, raising the stakes for firms with EU exposure or international group structures. In this environment, maintaining a strong AML/CFT record is not only a regulatory requirement but a core component of customer trust, franchise resilience, and long-term competitiveness.
Executive Insight for CEOs
AML/CFT performance has become a reputational asset or liability visible to customers and increasingly priced into trust.
The ripple effect of reputational damage
Compliance failures rarely remain contained. In today's hyperconnected financial markets, reputational damage spreads quickly and persists long after the initial incident is resolved.
The survey data highlights the scale of this risk. Eighty-seven percent of respondents say they would actively discourage friends or family from using a financial institution linked to money laundering or sanctions violations (57% strongly agree, 30% agree). This finding illustrates that the impact of AML or sanctions failures extends well beyond the affected customer, triggering a broader loss of trust across personal and social networks.
This dynamic reflects a powerful network effect. This is consistent with findings that revealed that consumers would advise against a bank with an AML scandal, demonstrating how reputational damage can rapidly spread through word-of-mouth and social networks. Customers do not assess compliance failures in isolation; they share experiences, warnings, and perceptions, both online and offline. As a result, reputational damage can propagate rapidly through social media, messaging platforms, and peer recommendations, amplifying the consequences of a single failure far beyond the original event.
Reputational damage now spreads at the speed of social media. Real-time news cycles and social platforms can transform AML or sanctions breaches into defining brand moments, often overshadowing the financial penalty itself.
For institutions, this means that compliance performance is increasingly visible and reputational, not just regulatory.
Effective risk management therefore requires more than strong preventive controls. Transparent, timely, and credible communication strategies are as vital to contain reputational fallout when issues arise. Institutions that can explain what happened, what is being done, and how customers are protected are far better positioned to preserve trust, even under scrutiny.
Executive Insight for CEOs
In a hyperconnected environment, reputational risk now compounds in hours. Social media and real-time news cycles can amplify AML or sanctions breaches far beyond the financial penalty, turning compliance into a brand differentiator for institutions that lead in transparency.
Why compliance is a customer priority
These dynamics help explain why compliance increasingly influences customer choice. When selecting a financial institution, a significant majority of respondents (81%) say that strong compliance with anti-money laundering and sanctions regulations is a top priority.
With financial crimes estimated to cost the global economy up to $2 trillion annually, customers are acutely aware of the risks associated with weak controls. For banks and fintechs, effective AML strategies are therefore essential for meeting regulatory obligations, but also for protecting brand equity and sustaining long-term customer confidence.
Media reports of money laundering and sanctions fines
Consumers are not only aware of regulatory enforcement; they actively respond to it. Media reporting of significant fines for AML, sanctions, and related compliance failures shapes customer perceptions and can materially influence retention.
Regulatory enforcement activity surged in 2025. According to publicly available data, regulators around the world imposed penalties in 2025 totalling $3.8bn.
Reflecting this heightened enforcement environment, a majority of respondents (83%) say they would actively consider switching providers if their bank or fintech company were to receive a major fine for financial crime violations. Only 15% are neutral and 2% strongly disagree. This pattern underscores that publicly visible fines are perceived not just as regulatory costs, but as signals of institutional risk and are strongly correlated with customer churn.
Executive Insight for CCOs
Compliance excellence is the new brand equity. Institutions that turn regulatory diligence into customer confidence will dominate the next cycle of competitive differentiation.
Firms that can demonstrate robust compliance infrastructure, and proactively communicate both successes and remediation efforts, are better positioned to insulate customer confidence from the reputational fallout of enforcement news. Conversely, reactive or opaque communication in response to fines can accelerate churn even among high-value customer segments.
High customer trust in financial institutions' compliance
Despite heightened public attention on financial crime enforcement and media coverage of regulatory penalties, customer trust in banks' and fintechs' ability to prevent money laundering and sanctions breaches remains remarkably strong.
An overwhelming majority of respondents (88%) trust their financial institutions to be effective in preventing financial crime, combining 45% who strongly agree and 43% who agree. Only 11% of respondents remain neutral, and only 1% strongly disagree, indicating that confidence in AML and sanctions compliance is both broad and deeply embedded.
The data indicates that for most customers, compliance integrity is assumed rather than questioned. Banks and fintechs have largely succeeded in establishing a baseline of trust that their controls are robust, responsible, and aligned with regulatory expectations. Since 2023, banking has consistently ranked as the most trusted subsector, reinforcing the perception that regulated institutions are effective custodians of financial system integrity.
As AI-driven compliance becomes standard across financial crime compliance processes, the basis of trust is shifting. Effectiveness alone is no longer sufficient. Customers, regulators, and supervisors increasingly expect institutions to be able to explain how decisions are made, particularly when those decisions affect access to funds or trigger additional scrutiny.
Executive Insight for Chief AI/Innovation Officers
The differentiators will start with explainable trust. Institutions that can clearly articulate how their systems protect customers will set the new industry benchmark.
In the UK, this expectation is reinforced by the government's AI Regulation Roadmap, which emphasizes transparency, accountability and human oversight in high-risk financial AI systems. Maintaining customer trust will increasingly depend not only on detecting, reporting and preventing financial crime, but demonstrating that compliance models are understandable, governed, and responsibly deployed.
The balance between compliance and convenience
While customers value strong financial controls, their tolerance for friction is limited. The survey highlights a clear threshold: 80% of respondents say they would consider switching providers if security measures caused repeated inconvenience, such as delayed payments, repeated identity checks, or account freezes (39% strongly agree, 41% agree).
This finding shows a critical reality for banks and fintechs: security that disrupts everyday banking quickly becomes a liability. Customers expect protection, but they do not expect to repeatedly justify routine behavior or face unexplained delays in familiar transactions. When legitimate activity is treated as suspicious without clear rationale, trust erodes and patience runs out.
Importantly, the data also shows nuance. Sixteen percent of respondents are neutral, and a small minority strongly disagree (4%), suggesting that some customers are more tolerant of security-related friction. However, in an increasingly competitive market, institutions cannot design controls for the most patient segment. They must meet the expectations of the majority.
Executive Insight for COOs and CPOs
The challenge is not choosing between compliance and convenience; it's orchestrating both. Effective financial crime controls must be precise, proportionate, and adaptive, capable of distinguishing genuine risk from normal customer behavior. Poorly calibrated controls that generate unnecessary alerts, repeated requests, or blanket restrictions increase operational burden and accelerate customer churn.
This balance is becoming harder to ignore as the third Payment Services Directive (PSD3), the Financial Crime Guide Changes (PS24/17) and the UK's evolving Open Banking framework continue to lower switching barriers. Customers can now switch providers faster and with less friction than ever before. In this environment, inconvenience is no longer a tolerable side effect of compliance but a direct trigger for attrition.
For UK banks and fintechs, the cost of friction has never been higher. Institutions that can maintain robust compliance while minimising disruption will be better positioned to retain trust, reduce complaints, and compete effectively in a market where customer patience is finite and switching is frictionless.
In a low-friction switching economy, security must be felt, but not constantly experienced.
The top factors influencing customer retention
When it comes to staying with a financial provider, customers prioritise reliability and clarity above all else. The survey shows that a smooth payment process is the single most influential factor in customer retention (75%), followed closely by clear communication (68%). These results point to a simple but powerful truth: customers are most loyal to institutions that work predictably and explain themselves clearly.
While consumers generally trust banks to protect their data, that trust is not unconditional. A Banking Consumer Study found that 84% are concerned about how their data is utilized, reinforcing the importance of transparency around data handling, AI-driven decisions, and compliance controls. In practice, confidence in protection must be matched with confidence in explanation.
These top retention drivers, process efficiency and communication clarity, are also central to the UK's regulatory expectations. Under the FCA's Consumer Duty framework, firms must demonstrate that their communications and operations consistently enable "good customer outcomes". Smooth, transparent customer journeys are therefore not only commercially valuable; they increasingly serve as regulatory evidence of fairness and diligence.
Likewise, under the FCA's Operational Resilience rules, institutions must ensure that critical customer services (like payments) can continue within defined impact tolerances. Payment reliability is no longer just a service expectation, it's a measure of institutional preparedness and control.
Together, these regulations mean that clear communication and process reliability are now compliance indicators as much as customer experience metrics.
Smooth payments and clear communication are not just satisfaction metrics. They're early indicators of compliance health. Operational clarity builds resilience before issues escalate.
Other factors, such as a reputation for integrity (52%) and confidence in an institution's technology to prevent financial crime (56%), remain important contributors to loyalty. However, the data clearly shows that customers stay for what they experience every day. Even visible commitments to fighting financial crime (38%) are secondary to the consistent delivery of clear, dependable service.
In today's UK banking environment, retention is built less on promises and more on performance. Institutions that invest in operational clarity and communication quality are not just improving satisfaction but strengthening resilience, mitigating risk, and reinforcing trust before problems escalate.
Where compliance and experience converge
Under the FCA's Consumer Duty and Operational Resilience frameworks, customer interactions are no longer peripheral to compliance. A delayed payment or a vague message is now measurable as a compliance outcome, not just a service issue. Friction is no longer merely bad for retention; it's evidence of regulatory weakness.
This alignment between customer expectations and regulatory mandates reveals a central truth: excellence in compliance and excellence in experience are becoming indistinguishable. Customers no longer accept trade-offs. They expect strong security, rigorous onboarding, and vigilant transaction monitoring, but they also expect speed, clarity and fairness.
What customers truly want is balance: they are willing to accept the occasional inconvenience, as long as it is resolved swiftly and, most importantly, communicated clearly and transparently. What erodes trust is not the intervention itself, but opacity, delay and inconsistency.
AI-driven analytics now give institutions a way to operationalise this balance. By identifying friction points early and translating communication, delay, and alert data into predictive risk signals, banks can address issues before they escalate into attrition, complaints, or supervisory scrutiny.
Executive Insight for C-Suite
The next generation of trust will be built at the intersection of AI transparency, regulatory integrity, and human communication. Institutions that master this balance will do more than comply, they will define the standards others are measured against.
Key survey takeaways
The findings from this survey point to a clear and consistent set of expectations shaping trust and loyalty in UK banking and fintech:
- Clear communication, transparency, and efficient onboarding are non-negotiable. Customers overwhelmingly cite these as the foundations of a positive banking experience and a prerequisite for trust.
- Trust and loyalty are closely linked to compliance performance. Public failures in AML or sanctions compliance quickly erode confidence and act as a strong trigger for customer switching.
- Compliance is essential, but tolerance for friction is limited. Delays, repeated identity checks, unexplained interventions, or poor communication during onboarding processes prompt customers to look elsewhere.
- Asset-rich and financially literate customers exert outsized influence. Older demographics, who control a significant share of financial assets, set expectations around security, clarity, and institutional integrity.
- Digital, AI-enabled onboarding and compliance have become the industry standards. Customers increasingly expect fast, accurate and proportionate controls that outperform static rules-based systems and outdated manual processes.
Together, these insights reinforce a central conclusion: customers no longer separate compliance performance from everyday banking experience.
What financial institutions should do next
To meet rising customer and regulatory expectations, financial institutions should focus on the following priorities:
- Modernise financial crime controls. Move beyond legacy, rule-heavy transaction monitoring approaches toward adaptive, AI risk-based systems that prioritise genuinely suspicious behavior and reduce unnecessary customer friction.
- Improve model-risk management programs. Board level members must understand and be a part of compliance program planning and have clear procedures in place on how to respond to specific threats. Additionally it is advised that they undertake ongoing testing and simulations of changes to risk policy, regulations or sanctions, to ensure they are prepared for and able to operationally deal with major impacts, for example a sanction change that causes significant uplifts in alerts.
- Invest in advanced onboarding and compliance automation. Scalable AI-driven solutions can streamline due diligence, shorten resolution times, and improve consistency without compromising regulatory standards.
- Make communication a core control. Clear, appropriate, and timely explanations should be embedded at every customer touchpoint, especially during onboarding, transaction interventions, and periodic reviews.
- Equip frontline teams to deliver trust. Provide continuous, high-quality training to ensure customer-facing staff understand not only regulatory requirements, but also how empathy, clarity, and transparency shape customer outcomes.
- Continuously monitor and optimize the customer journey. Use data and analytics to identify friction points early, measure their impact on trust and retention, and address them before they escalate into complaints or churn.
- Embed compliance as a shared organisational priority. Foster a culture where integrity, vigilance, and customer-centricity are aligned across compliance, operations, technology, and leadership.
The institutions that thrive in the next regulatory cycle will be those that treat compliance not as a cost center but as a trust accelerator. By combining transparent AI, resilient controls, and human-centered communication, banks and fintechs can turn regulatory excellence into enduring customer loyalty.
In an increasingly competitive and fast-evolving market, trust will belong to the institutions that protect customers effectively and explain it clearly.
About ThetaRay
ThetaRay harnesses the power of Cognitive AI for financial crime compliance, enabling financial institutions to precisely identify legitimate customers while flagging bad actors. The SaaS solutions overcome the limitations of traditional rule-based systems by shortening long implementation lifecycles, enabling efficient, risk-aware compliance operations. By transforming compliance from a regulatory obligation into a driver of growth, ThetaRay allows institutions to scale faster and expand confidently into new markets.
By uncovering hidden criminal networks and delivering actionable insights, ThetaRay empowers organizations to combat evolving threats, maintain positive regulator relationships, and enhance customer experiences. Implemented at some of the world's leading financial institutions including Santander, ClearBank, Mashreq Bank, Payoneer, Onafriq and Travelex, ThetaRay helps financial institutions thrive, fostering trust and confidence across the global financial ecosystem.
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