Understanding Banking Consumer Behaviours

Brand & Positioning Strategy
Content & Messaging
January 1, 2021
Financial Services

Key Takeaways

Consumer Behaviour — Consumers are likely to have more than one bank account and are increasingly likely to switch banks: Millennials are less loyal to their primary bank (compared to older generations) and are more sensitive to rewards and incentives. According to a Forbes advisor article, the number of bank switchers will jump from 12% (from 2018 to 2020) to 27% by 2022. 

Online & Mobile App Tactic — Provide an end-to-end account creation process online: For the first time, due to the pandemic, online banking account openings surpassed in-branch openings. As more and more consumers turn online to deal with their day-to-day banking needs, banks are also responding to this demand with 72% of surveyed banking institutions reporting that account opening could be done fully online via their website. To attract and keep consumers, consider focusing on adding account opening capabilities to your website and mobile app.

Online & Mobile App Tactic — An up-to-date app and fast speeds is of high importance for mobile banking: 44% of surveyed consumers say it is extremely important to them that their banks keep their digital features up to date. In terms of speed, consumers expect to be able to open a bank account via websites in under 10 minutes. That number drops to under 5 minutes for mobile apps. If the process takes longer than their expectation, up to 40% abandonment rate could occur, with that rate increasing significantly as the time to complete an application process increases.

  • Chase Bank attributed 1.5M new account creations due to their effort to decrease the online application process to between 3-5 minutes.

Consumer Behaviour — Importance of in-person visits lies in the ability to get personalized and relevant financial advice: 78% of U.S. retail banking consumers say they are interested in receiving financial advice or guidance from their bank, such as retirement-related advice and tips to improve their current financial situation. Consumers also value banking personnels’ expertise and prefer to hold discussions with their banker in-person rather than online.

Life-changing events such as moving to another city, changing a job or getting married are the key drivers to open a new bank account.

Driving factors in opening a new bank account
Source: Arbigo - Why Do People Switch Banks?

Dissatisfaction with high fees is the main reason for switching banks.

Source: Arbigo | Forbes

Millennials are less loyal to their primary bank and are more sensitive to rewards and incentives. Compared to older generations, millennials are 2.5 times more likely to switch banks for the right incentives.

Millennials - Rewards and Incentives
Source: Bankrate

The amount of consumers who will switch banks is projected to almost triple in the next two years. 3 out of 4 of bank switchers will be millennials.

Amount of Bank Switchers
Source: Forbes

The pandemic has accelerated digital adoption amongst all consumer cohorts.

Effects of pandemic to digital adoption
Source: Forbes -1 | Forbes -2 | The Senior List

4 in 5 customers prefer to manage their money digitally rather in person.

Banking Consumer Study
Source: Forbes | Accenture

The future of banking is likely to be a hybrid between digital and in-person. For day-to-day transactions, digital is king with in-person interactions for consulting and large decisions (i.e. mortgages)

Future of banking
Source: Bankrate

Online Account Opening

64% of checking account applications were done online during the height of COVID-19. This is an increase of 59% compared to the first quarter of the year.

Primary Checking Account Opening (%)
Source: Forbes

72% of surveyed banking institutions indicated that their account opening operation could be done entirely through their website. This figure is up 11% compared to the previous year (2019 vs 2020).

Ability to complete account opening on website
Source: The Financial Brand

46% of the same banks reported the same capability for their mobile app. While lower than website account opening numbers, this is also a 11% improvement from the previous year (2019 vs. 2020).

46% of the same banks reported the same capability for their mobile app
Source: The Financial Brand

Consumers expect to open a chequing account online in less than 10 minutes; if the process takes longer, up to 40% will abandon the application. Abandonment rates increase significantly as the time to complete an application increases.

Customers have more patience completing account openings on websites than via mobile applications

  1. Website expectation: under 10 minutes
  2. Mobile app expectation: under 5 minutes
Minutes required to complete bank account opening
Source: The Financial Brand

Account Opening Time - JP Morgan Chase & Co
Source: JP Morgan Chase & Co

Clients have high expectations from bank’s digital ecosystem. 44% say it is extremely important that banks keep their digital features up to date.

Account Opening Survey Satisfaction Questions
Source: Coconut Software

Personal Interaction / In-Branch

64% of consumers visited a bank branch at least once a month in 2020.

How often surveyed consumers visit physical bank branch
Source: Coconut Software

The main reason consumers visit a physical bank branch was to use an ATM, with 58% of consumers reported using an ATM on their last visit.

Which of the following actions did you do on your most recent visit to the bank?
Source: Coconut Software

Bankers expertise and advice is an invaluable asset that clients prefer to experience offline.

Which of the following activities would you prefer to perform in-branch as a opposed to online
Source: Coconut Software

78% of U.S. retail bank customers say they are interested in in receiving financial advice or guidance from their bank.

The most commont types of advice retail bank customers seek
Source: Coconut Software

42% of banking consumers claim it is important to establish a personal relationship with bank associates.

Personal Relationship Survey Question
Source: Coconut Software

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