Mobile banking mainstreams in the US, while digital payments fall short

From checking account balances to depositing checks with the snap of a picture, mobile banking apps have passed the tipping point of mass adoption as 61% of Americans with an active deposit account use a mobile banking app. But despite widespread usage of banking apps, consumers have been comparatively slower to utilize them for payment purposes as new research from Mintel reveals that just 39% of consumers say they pay friends or family through an online or mobile app.

The country’s youngest consumers are often the most confident when it comes to embracing new technology and recent innovations in the financial services industry are no exception. Millennials (aged 24-41) and adult iGeneration (aged 18-23*) consumers are driving the usage of both mobile banking apps and digital payments, with 85% of adult iGens and 82% of Millennials with bank accounts saying they use banking apps. Meanwhile, adult iGens (60%) and Millennials (61%) are three times more likely than Baby Boomers (aged 54-72) (20%) to have used digital payments through an online or mobile app.

Advancements in financial services technology may be on the rise, but, as highlighted in Mintel Trend “Return to the Experts,” human interaction remains vital, with 67% of consumers with a bank account agreeing that they prefer to talk to an actual bank employee as opposed to an automated system. In fact, the majority go out of their way to visit a branch to handle their finances in person: 87% of consumers with a bank account say they visit a bank branch near their home and eight in 10 (81%) say they use teller services.

“While slow to catch on in comparison to banking app usage overall, Americans are starting to see the value in digital payments, especially among the adult iGeneration and Millennial consumer groups, the majority of whom already use these services. This trend is expected to grow as digital payment technology continues to permeate the wider consumer landscape. Established peer-to-peer (P2P) payment apps such as PayPal and Venmo, as well as newer entrants like Zelle and Cash App, have helped drive the adoption of digital payments by convincing consumers of the security and ease of use of these services,” said Chris Shadle, Financial Services Analyst at Mintel. “However, given the sustained consumer preference to talk to a person, even in the age of artificial intelligence and chatbots, banks and credit unions should seize the opportunity to provide quality human touch points wherever possible—from ensuring adequate staffing of well-trained branch employees to providing seminars and educational sessions with industry experts.”

1 in 5 adult iGens say they have not used a savings or checking account in the last 3 months.
Younger consumers may be the biggest factor contributing to the rise of mobile apps and digital payments, but it seems many aren’t regularly using their bank accounts. In fact, one in five (18%) adult iGens say they have not used a savings or checking account** (eg checked a balance or made a deposit) in the last 3 months***, more than double the percentage of consumers overall who haven’t used their accounts (9%).

Meanwhile, the country’s younger generations are increasingly reaching for their debit cards in an effort to avoid debt, with younger Millennials (aged 24-31) (93%) and adult iGens (88%) more likely to use bank or credit union-issued debit cards than their older counterparts, including less than half (47%) of World War II/Swing Generation consumers (aged 73+).

“As the iGeneration moves fully into the financial world, banks and credit unions will grapple to become trusted partners in their eyes. Given that younger consumers prefer using debit over credit, and worry about building bad credit and going into debt, financial institutions have an opportunity to better engage with them by beginning the process of building long-term relationships through educational services that highlight the necessity of regular account management. What’s more, with many of these young consumers still living under their parents’ roof, they may be delaying their independent financial development, suggesting that companies can educate parents on the importance of helping their children establish a financial foundation as early as possible,” continued Shadle.

Although the majority (81%) of banking consumers claim to be satisfied with their current financial institution, Americans have some ideas in mind when it comes to building the ideal branch. The top improvement is, by far and away, flexible banking hours (51%). Convenience also drives the improvements consumers want to see at their bank as 37% want more branches in convenient locations, while one quarter (23%) would be interested in checking wait times before heading to their local branch.

“In a technological age where new entrants can rapidly rise to prominence and brand image can erode overnight, companies must be vigilant in their efforts to maintain trust and meet consumer demands. As ease of use and convenient branch locations are both top of mind in determining customer loyalty and satisfaction, brands could experiment with pop-up branches in high-traffic locations, offering an ideal middle ground amidst the industry trend towards more branch closures,” concluded Shadle.

*Mintel defines the iGeneration as those aged 11-23 in 2018. In this report, only adult iGens aged 18-23 were surveyed.
**Savings or checking account through a bank or credit union.
***In the three months leading to November 2017.

Press copies of Mintel’s Retail Banking and Credit Unions US 2018 report and interviews with Chris Shadle, Financial Services Analyst, are available on request from the press office.