The Top 10 Trends in the Digital Banking Industry

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions. What do you think about the trends below? Which one do you think rings most true for 2013 and 2014?

*click on each image to enlarge it

 

1. U.S. Consumers continue to favor large financial institutions. There are over 13,000 chartered financial institutions in the United States, yet close to three-quarters of all deposit dollars are held by just 100 financial institutions. Although deposits are flowing into large national banks, an opportunity exists to gain market share for regional & community financial institutions by offering consumers the most relevant services available in the market today.

Top Trends Image 1

2. The U.S. population is aging and changing banking behaviors. 39% of the U.S. population over the age of 44, compared to 34% 10 years ago. New consumers opening their first account at a financial institution represent a demographic that is different than five to 10 years ago, meaning an “older” consumer is opening up their first account with the bank and/or credit union.

Top Trends Image 2
3. Younger generations are becoming more active bill pay users. Although the population is aging, the age of active bill pay consumers is declining, with Gen Y consumers becoming more active bill payment users. In addition, mobile banking consumers are 14 years younger than offline bankers.

Top Trends Image 3
4. Boomers and Seniors are engaging in digital banking. Although Boomers and Seniors have tended to be late to technological adoption, these groups are showing an increasing willingness to engage in digital banking! The traditional product curve for online banking reveals early adopters are younger demographics who embrace technology, have grown up with a computer and internet access, and value anytime/anywhere convenience. Technology services such as email, Skype and eBay have become increasingly popular with Boomers & Seniors, and as their technology comfort level grows, so does their adoption of online banking.

Top Trends Image 4

5. Consumers are moving to mobile-only banking. More and more consumers are starting to “ditch” their PC and rely solely on their phone and/or tablet to conduct their banking needs. Mobile-only banking is increasing, while PC-only banking has declined over the past year. One challenge that financial institutions face from mobile banking is the inability to grow cross-selling opportunities through the online and branch channels.

Top Trends Image 5

6. Mobile bankers are early adopters. The majority of mobile users become engaged in mobile banking early in their digital banking lifecycle. Of new consumers who adopt mobile, 62 percent adopt within 90 days of registering for Internet Banking. Mobile banking leads to higher engagement for financial institutions’ customers. Over a month-long span, the average offline banker visits the branch two times and the ATM three times; a total of five touch points. When compared to an engaged online banker, the financial institution has three times the opportunity to cross sell to this customer.

Top Trends Image 6 (1)Top Trends Image 6 (2)

7. Digital bankers user multiple devices to connect with financial institutions. Now more than ever digital banking consumers are using multiple ways to interact with their primary financial institution, and the trend of consumers using multiple “touch points” continues to rise. Approximately 40 percent of digital bankers are using multiple devices to access their financial information.

Top Trends Image 7

8. More devices means more time online. As consumers use more devices to interact with their financial institution, they spend more time on their financial institutions’ website. This provides financial institutions additional opportunities to cross-sell their most profitable products to their customers. Online bankers spend approximately 38 minutes per month on financial institutions’ websites.

Top Trends Image 8
9. Mobile remote deposit capture is changing consumer behavior. Mobile features, such as mobile remote deposit, are changing how consumers interact with their financial institutions. For banking and credit unions, cross-sell opportunities will become increasingly relevant as more consumers rely on the digital banking channel to conduct transactions and become less dependent on brick and mortar visits. Consumers who adopt mobile remote deposit capture display similar deposit activity to consumers who never use remote deposit, but once mobile remote deposit consumers start actively using the service, they quickly become less dependent on the branch.

Top Trends Image 9

10. Personal financial management users are more engaged with their financial institution. The percent of consumers aggregating outside accounts into their online banking experience has doubled in three years. Consumers are able to see their entire financial picture in personal financial management (PFM) solutions, which means intelligent cross-sell opportunities are growing dramatically. Consumers who enrolled in FinanceWorks (Digital Insight’s PFM offering) in 2012 were two-times more likely to aggregate outside accounts than consumers who enrolled in 2009. FinanceWorks consumers log-in 54 percent more frequently than online bankers without FinanceWorks.

Top Trends Image 10

 

About Heather Youngo:  Heather is a business analyst with Digital Insight and leads the initiative on generating and maintaining the accuracy of financial institution profitability data.  Heather holds a Bachelor of Business Administration degree in marketing from the University of Georgia.

The data used for this article was analyzed by the following Digital Insight team members: Jason Weinick, manager of analytics, Ann Gladstone, business analyst, Fatai Bamidele, senior business analyst, Brenda Shimmons, manager of analytics and Denis Kimondo, senior marketing analyst.

FI Spotlight: Truliant Federal Credit Union

Truliant FCU in North Carolina is giving away iPads to promote the use of their online personal financial management (PFM) tool, FinanceWorks. Truliant members who sign up to use FinanceWorks between July 6 and September 29 are automatically entered to win money and/or iPads. FinanceWorks is free for Truliant members.

Each week, Truliant will award $100 to a member, and each month an iPad2 will be awarded.

A visual of how to sign up for FinanceWorks is below.

FI Spotlight: M&T Bank

Last month, M&T Bank launched new financial management and budgeting capabilities within online banking called FinanceWorks. For just $0.99 a month, the bank’s customers can manage all their financial transactions in one place, whether they’re executed on an M&T account or not. To provide further insight to members, M&T Bank also added a service which allows members to get their FICO credit score for a monthly fee. Mike Shryne, manager of alternative banking at M&T explains that the credit score is a true FICO score, giving members a snapshot of their “creditworthiness.” Shryne indicated that this added service was prompted by customers’ “heightened awareness of how important one’s credit score is to the ability to borrow, and also to monitor financial security in the age of identity theft.”  Since M&T updates FICO scores monthly, members can track their credit over time.

While some may be wary of the fees associated with these services, Shryne warns that these solutions prevent additional fees from untrustworthy third party sites.  Some “free” credit sites are misleading and end up charging expensive fees until you cancel the service, making a straight fee of $2.99 for “a straight service” a fair price.

You can read the full New York Times article here.

 

How are you helping your customers manage their credit and finances end to end? How important is it to give customers a one-stop dashboard of services and information? Tweet at @bankingdotcom or let us know in the comments below.