Like almost everything else, banking has changed significantly during the pandemic. More Americans than ever are navigating online banking thanks to social isolation, while banks have been placed at the center of the American government’s loan program propping up small businesses.
More Mobile Banking
In April, banks reported a 200% increase in new mobile banking registrations. Customers used these to deposit checks, track balances, and transfer funds without visiting an ATM or a branch.
In an exclusive GOBankingRates survey, analysts discovered that more than 1 in 10 adults aged 18-54 use online banks, with a full 15.18% of adults between the ages of 25 and 34 doing online banking. (The figure goes down to 6.34% for those between 55-64 age group and 4.19% for those over 65.) But when it comes to mobile banking – using an app – a staggering 42.93% prefer it between 18-24 years of age, 43.46% for the 25-34 age group, and 33.54% for the 35-44 age group. The figure goes down from there to 8.38% for those 65 and over.
“The split in old vs. young when it comes to banking with an app or banking in person at a branch just comes down to who was raised in which era and with what technology,” GOBankingRates associate researcher Julia O’Brien says. “Those who are younger especially (18-24) grew up almost their entire cognizant lives with smartphones and most businesses having an app,” she adds. “So it only makes natural sense that they feel comfortable banking on an app, because most everything they have encountered in life indicates to them that app/mobile banking is just how things are done in a society.”
Cash Use is Way Down
Early in the pandemic, there was a concern that coronavirus could be spread on surfaces. As a result, people wanted to use cash less. Some businesses stopped accepting it, and some consumers stopped using it. While the U.S. has a long way to go before it becomes as cashless as say Sweden, using less cash means fewer trips to ATMs or to local bank branches.
Business Banking Relationships Are More Valuable
The Paycheck Protection Program of the CARES Act, the first stimulus, gave businesses funds to keep people on the payroll, but it was done in the form of forgivable loans through qualified Small Business Association lenders. Banks that offer SBA loans – from the smallest banks in the country to major national banks – were inundated with application. Many prioritized their best customers, leaving some businesses shut out of the program, though some banks took this as their opportunity to shine.
Credit Card Travel Perks Lose Value
For years, the credit card industry offered special benefits for travelers, including credit cards co-branded with airlines and hotels. These customers ran large balances and welcomed the perks that came with these cards. Now, free baggage check and deals on currency exchange rates are a lot less important. The comparison is much simpler: rates, fees and cash back.
More Funds Transfers
Along with banking apps, people have been using Venmo, Zelle, and PayPal to transfer funds rather than cash, checks, or credit cards. People send birthday presents and pay personal trainers this way. In Chicago, vendors of StreetWise accept Venmo. StreetWise is a magazine sold by homeless people as part of a job development and social services program.
Lots of Fraud Investigations
Banks have had to devote more time to fighting fraud, as customers have had their identities stolen for fraudulent unemployment claims. Others filed fraudulent applications for PPP loans.
A More Digital Future
The pandemic has created a lot of changes in how we live, and many will be permanent. Now that people have been able to give up cash and learned how to use mobile apps, they are unlikely to go back to old ways of doing things. Will the U.S. finally become a cashless society? Maybe – but there are a lot of risks.
More from GOBankingRates:
- Best Checking Accounts of 2021
- Best Savings Accounts of 2021
- Best CD Accounts of 2021
- Best Money Market Accounts of 2021
- Best Online Banks of 2021
- Best Regional Banks of 2021
- Best Credit Unions of 2021
- Best National Banks of 2021
- Top 100 Banks of 2021
Yaël Bizouati-Kennedy contributed to the reporting of this article.