Pandemic Changed the Way We Bank: 40% Have Not Stepped Foot in Banks in Past Six Months
The pandemic has changed the way Americans live in many respects, including the way people bank. A new survey finds that 40% of consumers have not stepped foot in a physical bank in more than six months.
The Ultimate Guide to the New World of Banking survey, recently released by financial data platform MX, notes that the shift from traditional banking to digital banking accelerated in the wake of the COVID-19 pandemic, and banks are at risk of losing their current customers, not attracting the next generation and ultimately becoming irrelevant.
The main culprits include a legacy mindset; a broken approach to build vs. buy; not knowing your customers; and poor digital banking, according to MX.
The fact that 40% of consumers have not physically been in a bank in the past six months “was likely propelled in part by the COVID-19 pandemic and the decreased desire many people feel about venturing to a bank branch,” Jon Ogden, head of Strategic Content at MX, tells GOBankingRates. “For instance, our primary consumer research in the Ultimate Guide to the New World of Banking shows that 36% of people say they don’t plan to go into the branch as often as they did before the pandemic, even after all restrictions have been lifted.”
Ogden adds that these branch-wary sentiments almost certainly represent a sustained shift toward increased digital banking use and not just a passing trend.
“Likewise, as more people realize how many of their typical banking processes they can do via a digital device, the desire to return to physical methods (such as signing a bunch of paperwork) will diminish” Ogden says.
Other key findings of the survey are that 62% of respondents say physical bank branches will be a thing of the past, and more than 80% plan to use digital-only banking services more often moving forward.
Ogden explains that for financial institutions to adapt to these changes and win over future generations, financial institutions must partner with leading fintech providers that can give their customers — especially their young customers — a digital experience that competes with upcoming challengers.
“Without help on the digital front, it’s bound to only become more difficult to retain the edge that traditional players have held in this space,” Ogden says.
In addition, the survey notes that more than 85% of consumers currently have an account with a digital-only banking service such as PayPal, Venmo, Chime or Square.
Finally, the survey finds that 60% of those surveyed expressed interest in applying for a loan or depositing checks in an FDIC-insured checking account at a major tech company, such as Apple, Google or Amazon.
“Market analysts frequently wonder whether Apple, Google and Amazon will continue to make inroads in financial services, and this question gets at how consumers feel about the notion,” says Ogden. “The idea being that if consumers are open to having loans or checking accounts with a major tech company, then traditional institutions are in trouble.”
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