Digital banking reigns supreme
New research by PwC has identified that traditional banking may be coming to an end with digital banking overtaking it. In fact, consumers who bank exclusively via digital channels increased sharply from 26% to 32% between 2020 and 2021 and this number continues to rise. While consumers are demanding a digital banking experience, about 20-25% of consumers who would prefer to open a new account online are unable to do so. This indicates that while digital banking is the way of the future, many traditional banks remain in the past. However, this isn’t just a trend banks should be concerned about, with the proportion of people using digital finance technology rising from 58% to 88% between 2020 and 2021. So, what can your finance brand do to remain competitive in the digital financial space?
The three types of digital banking consumers
It’s not quite as simple as every consumer out there wants an exclusively online banking or digital financial experience. PwC has instead identified three different types of finance clients:
- Physical – These consumers still rely only on physical branches to complete their digital banking requirements. Since the pandemic, these consumers have steadily been declining from 42% in 2019 to 35% in 2021.
- Phygital – ‘Phygital’ consumers do most of their banking digitally, but still enjoy the ability to visit physical branches for certain needs and requirements. This blended consumer has slowly been rising, with it now making up 25% of the market base from 17% in 2020.
- Digital Natives – As banks continue to advance in the online banking space, more consumers are exclusively banking online. Today, over a quarter (25%) of adults have opened a digital-only bank.
The number of people using digital finance technology rose from 58% to 88% between 2020 and 2021
According to Peter Pollini, Banking and Capital Markets Consulting Leader, PwC US, “Direct banks are no longer a niche play; to a growing number of consumers, they are more relevant than regional or community banks.”
To remain competitive long into the future it’s critical traditional banks implement an online banking experience that’s easy to use and addresses consumers’ digital needs.
How banks can address consumers’ digital needs
A bank’s geography will soon become less of a selling factor for consumers as digital banking continues to rise. Instead, the solutions you provide to consumers digitally will become the battleground for banks across the country. Define a market niche and create solutions packages that address your target market’s key concerns.
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What consumers want in a digital bank
It’s clear consumers are increasingly demanding that traditional banks and finance organisations also offer digital solutions. In a Finder survey, they discovered digital banking services were rated as the second-best feature of people’s primary banks. But what do consumers want from their digital banking experience?
- Omnichannel customer service
- Easy and clear interactions
- Competitive pricing
It’s critical to remember that while consumers want digital banking and financial experiences, they also want to be able to speak to real people when they have complex problems. This is why your finance brand should aim to seamlessly blend your digital and in-person experiences, with 72% of consumers saying it’s important for companies to connect their digital and in-person experiences.
The effects of COVID-19 and the advancements in technology have meant more consumers are demanding digital finance tools. To stay ahead and remain competitive in the long term, it’s important your finance brand addresses these demands by creating a great digital experience.