Branching out: “Alexa, can you transfer funds to my savings?”
Banking was once centered around the physical branch, which customers had to physically visit for deposits, withdrawals, and basically any banking activity. But with the evolution of banking to digital, is the branch even relevant any more, and will banks -- as increasingly “virtualized” digital entities -- face new challenges, for example from giants in the tech world.
To explore their views, we commissioned a survey of 1,000 US consumers aged 18 and older and asked them how they prefer to bank, why they prefer that option, and how they view the future of banking. Today, we are releasing the full report here, and we’ve highlighted key findings below.
Nearly a third (27.9%) of Gen Z-ers and Millennials stated they do not think banks will have a physical location in 10 years.
Only 12% of Millennials would prefer to use a bank that only exists digitally – while almost half (43.4%) of all respondents said they would consider using a digital-only bank.
Nearly half of Gen Z-ers (43.2%) believe big tech companies could replace traditional banks in the future.
Half (50.1%) of consumers prefer to bank digitally via their bank’s mobile app or website.
Gen Z-ers use mobile payment apps more often than writing a check, or any other payment method besides plastic cards -- and 8.2% even ranked mobile payment apps as their #1 most-used form of payment.
Could Amazon or Google become the next big bank?
With the convenience of banking via an app and the desire to bank digitally among the younger generations, nearly a third (27.9%) of Gen Zers and Millennials stated they do not think banks will have a physical location in 10 years. And almost half (43.4%) of all respondents said they would consider using a bank that only exists digitally. This was even higher among millennials (53%) and Gen Z (49.4%).
If a bank were to only exist digitally, it opens a higher possibility that major tech companies such as Amazon, Google, and Facebook could throw their hat into the banking ring. Nearly half of Gen Z-ers surveyed (43.2%) reported they believe big tech companies could replace traditional banks in the future. Many would also switch their bank to one of these tech giants if they were able to, with half citing better technology and convenience as the main driving factors for switching.
Digital convenience drives banking habits
In today’s increasingly digital world, consumers value convenience. A majority (71.5%) of those who prefer to bank digitally attributed this to convenience over simplicity (24.4%) or trust (4.1%). In fact, of those who would switch banks to a major tech company if given the chance, more than half (55.6%) cited better technology and convenience as the main driver for that switch.
To keep their customers’ trust and loyalty, banks will need to continue to innovate, with a strong focus on convenience — a key decision driver for Millennials and Gen Z. Otherwise, they risk losing out to those that cater to this digital shift.