OAKLAND, Calif.–What would happen if a consumer’s financial institution closed the local branch? Just one-third of Americans say they would be “inconvenienced” by such a closure, according to a new survey that shows the ongoing shift from physical to digital-only mobile banking apps.
The Marqeta Digital Banking Survey found 62% of Americans already do the majority of their banking online, and only 31% of Americans say they primarily bank in person. In the U.K. the numbers are higher for banking online (74%) vs. offline (22%).
Confidence, Education Key to Growth
According to the survey findings, eight in ten (78%) respondents would actively consider bank security and reputation when deciding which account to deposit their paycheck into as digital banks are gaining strong market traction as secondary banking options.
“Yet, consumers see digital banks as riskier than traditional banks, which could be slow adoption despite attractive incentives,” the Marqeta survey states.
The solution: “Educate potential customers on the safeguards that are in place to protect their money can change perception–digital banks have an opportunity to build confidence with them in 2020. Consumer behavior fully confirms this shift. The majority of consumers do their banking online today…The U.S. is behind
the U.K. in adoption, but not by much. Sixty-two percent of U.S. consumers said they do the majority of their banking online, while just 30% do it in person.”
Participants in the Marqeta survey were asked to picture how they expected to engage with their banks in the coming three months, and 69% of U.S. consumers said they expected to use their banking app regularly in the next few months. By comparison, only 30% imagine themselves visiting a physical branch as frequently.
Other Findings
Among the other findings in the survey:
- 77% of U.S. consumers said that they expect banking to look very different in 10 years’ time. When pressed to comment on how they expect it to look different by 2030, 43% said they expect to spend significantly less time visiting a bank in person and to be making even more digital transactions. “We’re interacting with a bank through its app so much more frequently than a physical branch, and we’re not expecting this trend to reverse itself,” Marqeta said of the findings. “It’s making us dismissive of the in-person experience.”
- When asked about how they would feel if every physical bank branch was closed down tomorrow, only one-third of U.S. consumers said they would be inconvenienced by the closure. The physical branch didn’t even factor as important to consumers when they imagined having to fix an error that their bank had made: 23% of U.S. consumers said it was important for them to be able to visit a bank in person to fix a problem, while 54% said it was simply more important that it was fixed quickly, through whatever channel necessary,” Marqeta reported.
- 30% of U.S. consumers said that they considered switching banks within the last 12 months.
- 48% said they found the idea of a more modern option enticing.
- Just 17% of U.S. consumers said that they were completely satisfied with their current banking option.
- 74% of US consumers said that if they made a switch, they would consider a digital only bank.
Sticking Points
The three sticking points holding consumers back from making a change to a digital bank, according to the study:
- 20% said they felt like it was too much work to change banks
- 25% they felt like it was too interruptive to change banks
- 15% said they wouldn’t know where to start when it came to changing banks.
“People are also concerned about what happens to the data their old bank has about them should they change: 42% said they were worried about what would happen to their data,” the survey found.
Fifty-four percent of consumers said they felt like a digital bank was a riskier place to store their money.
For the full study, go here.