CHICAGO–Are direct banks beating traditional financial institutions in winning new consumers? A new survey offers some insights.
BAI released the new insights into consumer perspectives on direct banks during a recent webinar, “BAI Banking Outlook: Are Direct Banks Winning?”
More than 600 consumers participated in the survey focused on the perception of banking with a direct, or online, institution. While the majority of participants use a large bank (52%) as their primary financial services organization, 19% use a direct bank, 16% use a community bank or credit union, and 13% use a regional bank, BAI said.
“The key findings from the survey paint a stark contrast between why financial services leaders at traditional financial services organizations think consumers are moving to direct banks and the true driving forces,” BAI said in its analysis. “While many industry leaders believe that low rates and fees are the driving force behind direct bank adoption, consumers reported convenience (19%) as the most important factor. This finding indicates a shift in consumer attitudes about the definition of convenience, moving from physical branches to digital capabilities.”
‘Not Fully Aligned’
In addition to shifting consumer attitudes towards direct banks, BAI said consumers’ technological desires are not fully aligned with the industry’s. “Consumers among the Millennial, Gen. X and Boomer generations overwhelmingly cited that they want a clear, easy-to-use app for check deposit and bill pay (44%),” BAI stated. “However, Gen. Z – often defined as a generation of digital natives – felt differently, citing quick transfers (57%) and faster payments (45%) as a high priority.”
BAI added that notably, voice banking, which is highly discussed in the industry, ranked last among all generations with only 3% of consumers citing it as a priority for banking tech.
“Direct banks aren’t going away any time soon, and traditional financial services organizations should continue to view them as a real competitor,” said Karl Dahlgren, managing director of research for BAI, in a statement. “The way consumers define ‘convenience’ is rapidly changing from branch location to digital capabilities. Our research indicates that organizations that aren’t actively finding new ways to meet this need are at risk of being left behind.”