Experts see growth in digital-first banking

New findings from Marqeta, published Feb. 21, 2019, indicate millennials are less likely than older consumers to remain loyal to their banks. Compiled from a sampling of 1,200 adults, survey data found 48 percent of millennials would consider moving to a digital-only bank; only 1 in 6 respondents could not imagine changing banks. Researchers also observed a growing movement away from paper and electronic checks, with 48 percent of millennials claiming they "couldn't remember the last time they wrote a check for something other than utilities and rent."

According to industry observers, banks are feeling the pinch of the always-on economy and its expanding array of mobile payments and consumer touch points, and with younger generations firmly entrenched in these new tools, this trend is expected to accelerate. Thus, companies need to innovate to solve complex problems for an increasingly diverse set of customer preferences.

"Like every other service platform today, banking is being placed into a world that expects real-time, instant gratification," wrote futurist and author Brett King in the preface to Bank 4.0: Banking Everywhere, Never at a Bank. The book charts banking's trajectory from branch banking to multichannel banking to purely digital options for accessing banking services.

Digital-first innovations

King noted that branch banking digitalization began with paper-to-electronic conversions, followed by digital-first technologies such as mPesa, Alipay and WeChat. He pointed out that emerging countries, unencumbered by legacy banking infrastructures, had a strategic advantage over developed regions and produced the most compelling digital-first innovations.

"When technology-first players emerged in markets where there were large unbanked populations that had never visited a bank branch, there was no need to replicate branch-based thinking, there was just the need to facilitate access to the core utility of the bank," King wrote.

Following are additional highlights and emerging banking trends cited in Marqeta's research:

• Biometric authentication methods: The study showed growing adoption of biometric solutions, with 52 percent of millennials using TouchID and FaceID to authorize mobile wallet payments, compared with only 29 percent of baby boomers using biometric authentication methods.

• Peer-to-peer banking apps: 57 percent of millennials have used peer-to-peer banking apps like Square Cash or Venmo, and 49 percent were likely to use a peer-to-peer app instead cash or check for payment, compared with 20 percent of baby boomers.
• Mobile and online banking apps: Millennials would prefer to interface with a banking application rather than a human bank teller and were twice as likely as baby boomers to list a mobile app as most important (27 percent versus 14 percent). Baby boomers were twice as likely to prefer an in-person presence (20 percent versus 11 percent).

"Banking is being redesigned to fit in a world where technology is pervasive and ubiquitous; the only way you stay relevant in this world is by creating experiences that are purpose-built for that world," King wrote. "Iterating on the branch isn't going to be enough."

Editor's Note:

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