Digital Is the Primary Method of Banking for More Than 60% of Americans

Although the value of fraudulent activities in online banking is expected to reach $7 billion by 2020, there hasn’t been a lack of interest and development in the segment as businesses have recognized changing consumer behavior and preferences. Quite an extensive list of mobile-only banks has been eating up revenues of traditional branch-focused financial institutions, pushing the latter to change their development strategies towards digital.

Anthony Thomson, the Founder of Atom Bank, the UK’s first mobile-first bank, made quite a bold, but probably fair, statement at the WIRED Money Together with BBVA conference in London, saying that today’s money is digital, hence, the very rationale that underpins banks has gone.

Although Thomson may be right to some degree, would be a mistake to strike traditional financial institutions out of the game as the vast majority of them are actively exploring the ways customer preferences are changing and pivoting strategies to embrace the digital.

One of the largest banks in the country, Bank of America, has been putting effort to understand modern trends in banking behavior of Americans and recently published important insights derived from a survey.

Among the most interesting findings is the estimation that >62% of Americans cite digital as their primary method of banking. For comparison, in 2015 the number was 51% – quite a considerable difference. As expected, Gen Xers (70%) and millennials (68%) are the ones to most likely to primarily turn to mobile or online banking.

How do American consumers use a banking app?

Moreover, it appears that many adults are more concerned about their finances than their health – 48% are constantly checking on finances via mobile as opposed to 28% checking on health. Speaking of the usage, more than one-third (35%) of American consumers access a banking app once a day or more, while an overwhelming majority (84%) check once a week or more. It’s interesting that the constant checking of one’s financial status on an app is a stress relief for 41% of consumers.

In terms of functionality, there are certain activities for which apps are used the most. In particular, 87% use mobile banking alerts and notifications, with fraud/ unusual activity (54%), deposit made (52%) and low balance (43%) being the most popular.

When accessing the app, the majority of users check balances and statements (85%), transfer money between accounts (58%) and pay bills (52%).

Given the importance of the constant track on personal finances, Americans are well-equipped with banking apps. In fact, the majority (54%) of consumers reported using a mobile banking app, which is up from 48% last year. A particular group, millennials, are reported to be significantly more likely to use an app (75%).

Preferred channels of communication

Since digital is becoming a primary channel of interaction with banks, would be expected to see online methods prevailing. However, for a general population, in-person communication seems to be more preferable with 38% of total respondents reporting it to be the preferred method versus 29% preferring text.

The situation is different with millennials, though, among which 44% prefer texting over 33% preferring in-person communication. And while texting, 91% of millennials admitted to using emojis with nearly a quarter using them in every text.

Changing payments

Given the emergence of a variety of mobile wallets, no wonder 40% of respondents would use or already use their phone to make purchases at checkout. And millennials (57%) are reported to be most likely to do so. However, when breaking down the 40%, it appears that only 8% of respondents are actually using their phones to make a payment. The good part is that the other 38% would use it. For providers, it leaves a wiggle space to race for the best user experience to lure the ones that are already inclined to phones for making payments.

P2P money transfer service providers would be greatly encouraged to find that the majority (57%) of consumers would consider or are already using a peer-to-peer money transfer service from their bank. But again, while 50% would consider a P2P payments service, only 7% actually use one.

When considering peer-to-peer payments, consumers deem convenience (59%), incentives (29%), real-time nature (23%) and popularity among friends or family (20%) influential.

As for the future, the majority of consumers (>60%) reported to be favorable to emerging payment methods, with mobile wallets (33%) and P2P payments (29%) to be the most popular. As expected, millennials (76%) are the ones most likely to be early adopters in this space.