Trust, security factors in digital-only banking services

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Bank customers have shown in a PYMNTS study that the convenience and ease of use provided by technology-based services is of the highest value to their experience, which is a deciding factor in choosing a bank. This preference pushes the exclusively digital bank to develop new products and services that meet the interests of its customers.

Understand customer preference

Modern consumers expect digital access to be part of their banking experiences. Digital Banking, a recent collaboration between PYMNTS and Optherium, which exposes clients’ perspectives on the landscape. The study reports that although online banking services are in demand, 18% of the 2,225 consumers surveyed are still hesitant to log into their bank accounts digitally. And 11% of consumers still interact with their accounts primarily at a physical branch.

While interest in digital banking is high among customers, with 60% banking primarily through a mobile app, an incredibly low 7 in 100 consumers primarily bank at a digital-only bank. PYMNTS has discovered that this unmet demand presents new opportunities for digitization.

In addition, it exposes traditional banks to increased competition from non-bank companies. The study found that banks and non-bank providers have many opportunities to meet growing consumer demands. Data shows that 49% of consumers are very interested in online banking services from large companies. In addition, 41% of salaried consumers wish to receive online banking services from their employer.

The market is a long way from full adoption of digital-only banking, leaving substantial growth opportunities for traditional and new providers, especially large corporations, including major banks with which consumers now have their banking relationships.

High expectations for seamless experiences from trusted brands justify consumers looking for digital-only banking. Customers appreciate well-known and trustworthy companies that have a proven track record of delivering great digital experiences and delivering reliable and secure products.

More interestingly, the generational transition and existing trends in the financial services market suggest that younger generations will turn to digital financial services to help them manage their growing financial assets as they increase their earning capacity. A much larger share of Gen X (56%), Millennial Bridge (66%), Millennial (66%) and Gen Z (64%) consumers want to move their main accounts to digital-only bank accounts than baby boomers and seniors, suggesting an opportunity for digital only and non-banks to compete aggressively for a share of bank assets.

Digital-only banks have a significant opportunity to increase their share in the banking market by providing a convenient financial service that protects customer privacy and data – but their work is enormous to prove that they can deliver both.

The study found that 22% of customers interested in digital-only banking cited trust as the most important factor in making a digital-only bank their primary bank. Another 24% appreciated the greater convenience. Ease of use, data security, mobile capabilities, fraud prevention and online capabilities are other factors that customers appreciate when choosing digital-only banking.

See also: How banks and payment service providers can protect customers and merchants from fraud threats

Focus on data security

The low adoption rate compensates for the strong interest in digital-only banking services. PYMNTS found that security concerns tend to discourage consumers’ interest in obtaining digital-only banking services from non-banking providers: 47% of consumers who are not interested in digital-only banking services felt that data security was the main reason for not going digital only. banks. Fraud was also a significant concern, as 41% of indifferent consumers identified the risk of fraud as a reason for their disinterest. Among outgoing users, a significant portion reported significant issues with digital-only banking services such as trust (22%), ease of use (19%), and data security (11%).

The low adoption rate highlights an opportunity for digitization-focused banks and non-banks to promote their ability to provide convenient, reliable and secure services to meet market demand. They need to prioritize customer safety as customers often neglect their data privacy by trusting their banks completely.

“Consumers expect businesses to protect their personal information from scammers, but they don’t want that protection to come at the expense of convenience. Balancing experience and risk is a big challenge for us, ”Anand Talwar, deposit and consumer strategy manager for digital-only bank Ally, told PYMNTS.

Technology has already provided simple ways to achieve this when executed at the right time. Passwords have served consumers for a long time, but are no longer fully reliable against threats from sophisticated fraudsters. New methods of identity verification, such as biometrics and multi-factor authentication, can better protect consumers and financial institutions against data threats. Consumer willingness to try advanced identity verification options has exploded during the pandemic, suggesting it’s time for digital-only banks to offer these options to their customers.

“The world is moving very fast in this space,” said Talwar. “We have already invested in a number of authentication capabilities and machine learning-based models, and we will continue to introduce as many new capabilities as possible. We want to continue to evolve and ensure that we move towards our goal of providing customers with a convenient and frictionless experience while ensuring that [they are] protected.”

As financial services continue to evolve, the need to understand consumer demands and expectations becomes increasingly critical. Traditional banks are integrating technology-driven services into their operations to maintain the trust of their customers. Digital-only banks must step up and lead digitization efforts by addressing customer needs and concerns if they are to have a meaningful impact on banking and financial markets.

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NEW PYMNTS DATA: DIGITAL BANKING STUDY – THE BATTLE OF BREWING FOR WHERE WE WILL BANK

On: Forty-seven percent of U.S. consumers avoid digital-only banks due to data security concerns, despite considerable interest in these services. In Digital Banking: The Brewing Battle For Where We Will Bank, PYMNTS surveyed over 2,200 consumers to reveal how digital-only banks can boost privacy and security while providing convenient services to meet this unmet demand.


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