2020 has been a particularly tough year for financial institutions, but with every cloud, there is a silver lining. The pandemic forced many banks to close branches or reduce their service, which provided the perfect opportunity for banks to improve their digital and mobile banking service.
FinTech had the potential to leave traditional financial institutions in their wake, but the COVID-19 pandemic has helped banks not only accelerate their digital plans, but rapidly make up ground lost to FinTech.
The rate at which customers have been adopting digital banking solutions has slowing been increasing over the years, but the trend began to increase even further in 2020. Some of these statistics highlight this:
- The Financial Brand reported that 35% of customers adopted online banking, with 30% specifically increasing their use of mobile banking, since the start of the COVID-19 crisis.
- A report by the Global Mobile Consumer Trends found that downloads of mobile banking apps grew globally by 20 percent from Q1 to Q2 2020.
- British bank Lloyds recorded a 50% increase in the number of people registering for online banking compared to last year. Likewise, British Bank TSB, saw a rise of 137% in online banking enrollments since the lockdown started.
The Growing Need for Digital Banking
With fewer people wishing to visit bank branches, especially in part to COVID-19, the need for digital banking services is imperative. According to Novantas, In April branch traffic fell by more than 30% compared with the same period last year. Similarly, teller transactions dropped 32% in April compared with the same period last year.
These declines in in-person banking will only drive more people towards digital banking. In fact, Lightico’s recent survey found that more than 55% on the people they questioned claimed they would visit bank branches less often, and another 26% said they would avoid face-to-face banking altogether.
The growing reluctance of people wanting to visit branches and custommers ever-growing desire for a smooth, interconnected digital banking experience means banks must adapt or risk becoming obsolete.
How Banks Are Taking Action
Many banks have utilised this opportunity to ramp up their digital banking efforts. A recent survey by Olive shows that 73% of banks in the UK invested over £50,000 in improving their online services since the beginning of the pandemic, and 33% of them invested between £500,000 and £2 million. This may not represent a huge amount of a big bank’s budget, but it clearly shows the desire from banks to move forward with the times and address the threat of Fintech.
Going forward, banks now have the opportunity to compete with Fintech by embracing tech and delivering a service that ensures account holders can have quick and easy access to their finances, whilst also being highly secure.
Technology’s role in banking will only become more important as time goes on. Banks that wish to stay competitive must continually seek to evolve and view digital banking services as an investment rather than a sunk cost.