Revation Systems

2020: The Year of Digital-Only Banking?

Written by Pat Reetz | Jan 15, 2020 5:07:35 PM

As technology continues to impact the banking industry today, a shift is beginning to occur in consumer behavior. Where consumers have historically relied on a primary bank (much like the concept of a primary care provider in the healthcare industry) to accomplish all of their banking needs, recent digital trends have resulted in a more fluid approach in consumer banking patterns – especially for today’s younger generations.

Tech is Trending

According Statista, the number of digital banking users was forecasted to surpass 161 million in the United States last year – more than 20% increase from 2014 – and the prevalence of smartphones/digital technologies and an increase in fintech firms are attributed to this rise in digital banking. This statistic is indicative of the sheer strength that digital banking has today – especially for the younger generations of consumers like Millennials and Gen Z. As smartphones and mobile devices have become practically ubiquitous, consumer preferences for communication have also evolved. And, as consumer preferences expectations for communication change amidst the current digital transformation, the nature of the bank-consumer relationship will naturally experience change, as well.

Though the popularity of digital banking can be attributed to variety of factors, perhaps the most significant appeal of digital banking exists in its convenience and flexibility that it provides to today’s always on-the-go consumers. As our society continues to become more fast-paced, consumers have become reliant on their mobile devices to accomplish the majority of their communication – whether it be with their financial institution or healthcare provider.

Digital Banking as One Piece of the Puzzle

Although the trend of digital banking has certainly increased over the past few years, it would be inaccurate to proclaim that all Millennials today would be in favor of adopting a digital-only banking strategy. In fact, less than half of Millennial respondents (ages 18 to 34) in a Marqeta Consumer Behavior Survey last year said they’d consider moving their accounts to a digital-only institution. While digital banking is indeed heavily used today, this statistic portrays a tentativeness in adopting the all-or-nothing approach of committing to a digital-only bank. A 2019 survey of US consumers performed by Cornerstone Advisors found that 44% of Millennials considered one of three megabanks (Bank of America, JPMorgan Chase and Wells Fargo) their primary bank. One reason why consumers, especially Millennials, may be hesitant to embrace the digital-only approach (hence their loyalty to megabanks) may be the lack of options that comes with digital-only banking.

For example, if a consumer decides to bank with a digital-only institution, they ultimately relinquish having the option to visit with a human representative of the bank at a physical branch location. And although current technology may influence some to believe that that is exactly what consumers of today’s younger generations prefer, there are certain scenarios where even the most tech-reliant consumers still have the need for visiting a brick and mortar branch. Perhaps what today’s consumers value most is having flexibility in their options for communication.

Given this lack of willingness from even today’s younger generations to completely commit to a full, digital-only approach, it is likely that digital banking will remain as simply one piece of the larger banking puzzle for the near future. Since today’s consumers value having flexible options for communication, it is likely that the immediate future of banking will consist of a blend between digital enhancements and more secure, on-the-go connections to human bankers.

The Importance of the User Experience

As advancements in digital technology show no signs of slowing down, banks are beginning to shift their focus on enhancing the digital customer experience while still providing options for consumer interactions between the four walls of the physical financial institution. One of the main ways that banks can enhance the customer experience is by improving the user experience on their digital banking applications.

From simplifying the user interface of an application to providing a seamless multichannel experience to personalization of the consumer experience, many banks today are turning to artificial intelligence (AI) technology to meet the growing preferences for consumer communications. Recent advancements in AI technology such as chatbots and tone analysis are enabling banks to provide an easy, fluid experience for consumers that prefer to accomplish their banking through a digital channel.

As fintech solutions continue to advance and the consumer mindset continues to welcome an at least partially digital approach, digital banking will surely remain a strong force in the coming years. And though consumers are not quite ready to ditch their traditional financial institutions for digital-only banking platforms, banks can weave digital banking solutions into their approach to enhance the consumer-bank relationship.

 

Replacement of Legacy Contact Center Infrastructure

A replacement of legacy contact center Infrastructure, LinkLive enables a seamless contact center experience in one network platform that supports an organization's entire contact center.