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How Digital Banking Impacts Consumers

Bynewsmagzines

May 11, 2023
How Digital Banking Impacts Consumers

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Opinions expressed by Entrepreneur contributors are their own.

During the pandemic, the ways we accessed and managed our money transformed. To be sure, in-person banking was dropping in popularity even before the start of the pandemic, while digital platforms were seeing a slow and steady rise.

Although their popularity was beginning to wane, brick-and-mortar bank branches were undoubtedly still very much a part of many consumers’ financial routines. When the pandemic hit, the digital and traditional banking balance began a rapid shift. In 2020, 52% of bank customers went to branches to manage their money (or were branch-dependent), according to a J.D. Power survey. Only two years later, in 2022, more than 65% of U.S. bank customers were using digital banking services, per Bankrate.

The challenges digital banking poses to consumers

With this evolution in omnichannel banking come unique obstacles and opportunities — especially for older adults. While more people in this age demographic are now using digital technology than ever before, a study by the Pew Research Center indicates that 25% of adults aged 65 or older don’t use the internet, 36% don’t have home broadband, and 39% don’t own smartphones. According to MX’s 2022 report on digital and mobile banking trends states that only 39% of Baby Boomers use a mobile app to manage their financial accounts.

Related: 8 Ways Digital Banking Will Evolve Over the Next 5 Years

When this is considered, along with the 30% of American adults who struggle with technology and the economic barriers that prevent tech adoption, it becomes obvious that the digitization of banking presents challenges to many people.

Adoption & implementation

All change requires some effort and adjustment, no matter how big the benefits might be on the other side. The widespread adoption and promotion of digital banking is no exception, but it doesn’t affect everyone in the same way.

Related: Offering a Unified, Digital Banking Experience

Older adults, for example, often have to overcome ageism in digital tech. Because new digital devices and services generally aren’t designed with their needs in mind, they may find digital banking to be counterintuitive, overcomplicated, or physically difficult to use.

Building trust

Without the human element, trust can be a major issue. Less than one-third of people surveyed by Accenture in 2020 said they trusted banks “a lot” to look after their financial well-being, according to the report from Accenture. That’s compared to 43% who said the same only two years ago, not to mention the growing distrust resulting from the recent failure of the Silicon Valley Bank on Friday, March 10.

However, the tide might be starting to turn for digital financial services. With the benefits of lower fees and increasingly lower barriers to access, it’s perhaps not surprising that 61% of traditional bank users reported being somewhat or highly likely to switch to an online-only bank soon, according to the same Bankrate research mentioned above.

How can banks offer excellent experiences to all customers post-pandemic?

The tangible experience of walking into a banking branch and interacting with a human being might seem a world away, but it remains the norm for many people. Members of older generations, particularly, might rely on that physical experience of attention and appreciation as they navigate their financial lives.

Here are a few effective ways to integrate human touches into excellent customer experience for consumers of all age groups:

1. Remember the benefits of human interaction

People haven’t lost the basic need for in-person, face-to-face interaction. Building human interaction into your digital experiences helps customers adapt, learn, and trust. Whether that trust comes from a highly advanced, intuitive chatbot connecting customers to personalized messaging on your website or features that direct digital users toward real people who can help them solve their problems.

It is essential that all businesses today understand that attentive customer service is more important than ever.

2. Don’t let up on security

Security challenges and risks litter digital banking’s future with obstacles. Increased use of mobile platforms and digital payments has upped the risk level regarding cybersecurity. Many customers now turning to digital banking are from older generations: less tech-savvy people who feel compelled to join younger generations online for fear of being left behind.

Related: ‘Information, Communication & Transaction 3 Stages of Digital Banking’

For these people, ramping up cybersecurity is even more critical. Anti-phishing methods and education (and the adoption of mandatory two-factor authentication) could help protect even more vulnerable users.

3. Prioritize accessibility

Make your digital banking service as accessible as possible so that everyone can use it, no matter their digital knowledge. To that end, the University of Wisconsin-Madison recommends that websites provide captions, large font sizes, screen readers, screen magnification, and fast-loading web pages. You could also offer in-person instruction to customers who need additional help.

Sometimes it can feel as though finance’s digital transformation has happened too rapidly for customers’ expectations to catch up. Fortunately, that catch-up work is happening now. As customers from all generations come to grips with mobile and online banking and what they can offer, banking companies can ease the learning burden by delivering secure and excellent personalized banking experiences. Don’t wait to get started.

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