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Top 5 Digital Banking Myths

Digital banking has experienced tremendous consumer adoption as high speed internet connections have become readily available and consumers move more transactions to mobile devices. Even with this widespread adoption, however, there are widely held myths within the financial services industry around online and mobile banking. It's time to set the facts straight.

For avid online and mobile banking users, it’s hard to ignore the conveniences of digital banking. From real-time account balances to paying bills in a manner of minutes to seamlessly transferring funds to family and friends’ savings accounts, digital banking has undoubtedly enabled an easier and faster experience for consumers.

Subscribe TodayWhile it’s no secret that digital offerings provide an enhanced banking experience, over the past decade several myths have formulated surrounding digital banking. Using the analysis of consumer data provided by over 100 unique bank and credit unions encompassing approximately 3.5 million checking account holders, the Digital Insight analytics team has identified numerous truths to falsify these mythologies.

The top five most common banking myths include:

  1. Only Generation Y and Generation X utilize digital banking.
  2. Consumers who log into online banking spend little time on financial institutions’’ websites.
  3. Online and mobile banking are still secondary channels; the branch is the primary mode of transacting.
  4. Consumers will no longer frequent branches once they start using mobile remote deposit capture.
  5. The PC is dead – the mobile revolution has overtaken laptops/desktops as the preferred method for accessing financial information.

Using the analysis of consumer data provided by over 100 unique bank and credit unions encompassing approximately 3.5 million checking account holders, the Digital Insight analytics team has identified numerous truths to falsify these mythologies.

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Myth 1: Only Generation Y and Generation X utilize digital banking

Facts:

  • On average, Baby Boomers and Seniors comprise 75% of the deposit volume at financial institutions.
  • 45% of Baby Boomers and Seniors actively use online or mobile banking.
  • User analytics show these consumer segments have seen strong growth over the past couple of years as they have become more comfortable with the technology and the security of the channels.
  • Data has shown that once Boomers and Seniors utilize online banking, they become avid users of online banking services such as bill payment and personal financial management. In fact, Seniors have a higher active use rate of Bill Payment than Gen X!

Takeaway: Financial institutions should not ignore that power of digital banking on Boomers and Seniors.

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Myth 2: Consumers who login to online banking spend little time on financial institutions’ websites

Facts:

  • The average time spent per login on a bank or credit union website is over 3 1/2 minutes.
  • On average, active digital bankers access their financial information 12 times per month via a PC, mobile device or tablet.
  • To put things in perspective, customers spend an average of 35 minutes each month on their financial institution’s website via a PC, meaning the average online banker spends more time on their bank or credit union’s site than popular sites such as LinkedIn and Amazon.

Takeaway: Financial institutions need to maximize their exposure to consumers on their website. However, they also must find the right balance for their website to be both informative for consumers and utilized as a sales mechanism.

Myth 3: Online and mobile banking are still secondary channels – the branch is the primary mode of transacting

Facts:

  • A recent ComScore report showed that in September 2013, 147.9M people in the U.S. owned smartphones with nearly 50% of smartphone owners using mobile banking.
  • Consumers who utilize digital banking have 3-4 times more monthly “touches” with their financial institution than offline bankers.

Takeaway: The opportunity for financial institutions to engage and transact with their customers on the digital platform is exponentially higher compared to offline bankers.

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Myth 4: Consumers will no longer frequent branches once they start using mobile remote deposit capture

Facts:

  • Consumers who utilize mobile remote deposit capture are highly engaged with their financial institution across all touch points, including the branch.
  • Though financial institutions that offer mobile remote deposit capture for their consumers have seen overall branch traffic reduce by over 10%, over 70% of consumers continue to frequent the branch on a monthly basis.

Takeaway: While mobile remote deposit is causing a slight decline in branch visits, there is still an active consumer base that visits the branch for reasons such as cash deposits and opening of new accounts.

Myth 5: The PC is dead – the mobile revolution has overtaken laptops/desktops as the preferred method for accessing financial information.

Facts:

  • Over three-quarters of consumers who access their financial information utilize a laptop/desktop to login to their bank or credit union’s website.
  • Despite younger demographics having “ditched” the PC for smart phones and/or tablet devices, early adopters of online banking such as Gen X, Baby Boomers, and Seniors most commonly access their financial information via a desktop or laptop.
  • Combined, Baby Boomers and Seniors make up the highest percentage of Digital Insight’s users for Internet Banking (73.9% combined) compared to Gen X which makes up 57.4%.

Takeaway: Financial institutions need to constantly monitor how their customers/members access their financial information – via PC, mobile, and/or tablet – so that they can maximize cross-sell messaging on each device, to the right demographic.


Jason Weinick is the Manager of Analytics at Digital Insight, an NCR Company. Jason leads the initiative on client profitability analyses, providing banks and credit unions a valuable in-depth look into the value of the digital banking channel. Jason’s background includes over 15 years’ experience within the financial services sector, focusing on consumer behavior, risk modeling, reporting, and financial analysis. Jason holds a Bachelor of Science degree in Finance from Clemson University.

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All content © 2016 by The Financial Brand and may not be reproduced by any means without permission.

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Comments

  1. Jason, thanks for the great information. Though the article says 70% of all consumers are using the branch monthly, many of the institutions we work with are not seeing that level of branch traffic. So Financial Institutions need to manage the shift from branch driven customer interactions to online customer interaction and acquisition. The best way to do that is still by making it convenient for customers with online chat, the ability to open accounts and apply for loans online, as well as mobile banking and deposits. And since we know that many customers will still want to sit down and talk with a branch representative, the ability to set up an appointment online in real time. http://www.stonehambank.com is an example of a community financial institution that is providing all of those conveniences to their customers.

  2. In addition to dispelling these digital banking myths, banks must do a better job communicating their value and purpose. These takeaways from your article can be woven into their brand message as banks establish themselves as trusted advisors and providers of financial well-being to their customers. A great customer experience across all channels is critical to building long-term relationships.

  3. Rowan Taylor says:

    Good points on the myths surrounding digital banking although I would welcome thoughts on how advances in digital banking consumer trends compare between emerging markets and high income economies. Looking at the success of correspondent banking networks in Latin America to extend low cost distribution networks, mobile banking in Kenya becoming a de-facto payment provider; starting with a very low mobile phone penetration. On the other hand, the lack of uptake in mobile banking in Russia and size but complexity of the Chinese market I see a divergence in approaches to scale of digital banking services. With 8 of the top 25 largest banks in emerging markets and Western banks selecting emerging market countries to expand into, to leverage their domestic competitive advantages, a one size fits all approach to digital banking might not be the right answer and an ability to dial up or down the range of services prudent. Banks are investing in mobile banking and payment technologies to respond to changing market conditions and reduce their fixed costs, however I do feel banks will need to continually create compelling customer experiences to capture new bank customers and products without building new costs into their business models focused on trust, long-term relationship and increasingly relevance and convenience as Karen wisely points out.

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