Understanding Banking Consumer Behaviours

Key Takeaways

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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.

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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.

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

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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.

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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.

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The pandemic has accelerated digital adoption amongst all consumer cohorts.

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

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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)

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.

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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).

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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).

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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

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

Personal Interaction / In-Branch

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

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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.

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

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

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

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