Consumer Trends in Banking: Shaping the Future of Finance

As consumers become increasingly tech-savvy, they're expecting more from their banks. Banks are responding by investing in digital transformation, with a focus on mobile banking and online services.

Mobile banking is on the rise, with 71% of smartphone users using their device to access banking services. This is no surprise, given that 60% of consumers prefer to bank online.

Consumers are also looking for more personalized experiences, with 70% of millennials wanting their bank to offer tailored financial advice. This is driving the growth of fintech companies that use AI to provide personalized financial services.

The shift towards digital banking is also changing the way consumers interact with their banks, with 55% of consumers preferring to communicate with their bank through online channels rather than in-branch.

Expand your knowledge: Internet Banking and Mobile Banking

The banking industry is undergoing a significant shift towards digital channels, with 50-70% of customers now preferring digital banking services to manage their finances. This is a 40% increase in digital interaction in banking over the past few years.

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According to a survey by McKinsey, customers expect 24/7 omnichannel access to customer support, ranging from call centers to chatbot tools. Banks are investing heavily in digital infrastructures and technical integrations to support this operational advancement.

Mobile banking is gaining popularity across all age, race, or income-based groups, with 90% of Hispanics owning mobile phones. However, debit card use is trending down, with only 58% of households actually using their debit cards.

The top reasons why unbanked households avoid banks are: not enough money to keep in account (57.4%), avoiding bank gives more privacy (28.5%), don't trust banks (28.0%), account fees too high (27.7%), and account fees unpredictable (24.0%).

Consumers are increasingly seeking a more personalized experience from their banks, with 59% rating their main bank highly for its range of products and services and for the competency of its tailored financial advice.

Digital channels are becoming a primary means of interaction, with 71% of bank customers regularly using online banking and 43% using mobile banking.

The majority of consumers use digital channels for quick functional tasks only, suggesting that banks need to focus on creating a more human connection with their customers.

A recent survey by Accenture found that only 23% of respondents rate their main bank's customer service as excellent.

Consumers are also becoming more discerning, with 47% of organizations lacking access to deep customer data and identifying it as one of the biggest obstacles in achieving CX success.

Here are some key statistics on consumer behavior in the US:

The average checking account balance in the U.S. is a whopping $9,284.92, according to the latest data from the Fed. That's a significant amount of money, and it's interesting to note that the median balance is much lower, at $3,400.

The average savings account balance is also quite high, at $15,634.67, which is a good thing for those who are saving for the future. However, the median savings balance is still relatively modest, at $7,000.

It's worth noting that these figures can vary depending on individual circumstances, but they give us a general idea of what to expect.

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Banking services and fees can be a complex and confusing topic, but let's break it down.

The average bank balance, interest rates, and fees change over time, but we can look at current trends to get a snapshot of the current state of banking in the U.S.

Monthly maintenance fees at checking accounts can range from $12 to $25, while savings and money market accounts often have lower or no fees.

The most common bank fees include monthly maintenance, ATM withdrawals, wire transfers, and overdrafts, which earn banks billions of dollars in annual revenue.

Online banks often have fewer expenses and can offer better-priced services and products, but the lack of physical locations means some consumers may prefer traditional banks.

The top reasons people avoid banks include not having enough money to keep in an account, avoiding bank fees, and not trusting banks.

Here's a breakdown of the top reasons cited by unbanked and underbanked survey respondents:

Income volatility is also a major reason for the number of unbanked and underbanked households, with 12.9% of unbanked households experiencing a lot of income variation.

Digital banking is on the rise, with 40% growth in digital interaction in the past few years. This shift towards digital is a transformation of the banking industry, driven by customer demand for convenience, speed, and efficiency.

Customers now prefer digital banking services to manage their finances, with 50-70% opting for online banking. This means banks need to migrate and enhance their digital customer experience with continuous improvements like omnichannel customer interactions and AI-assisted chatbots.

Mobile banking is also on the upswing, with 94% of mobile banking users checking their account balance or recent transactions on their smartphones.

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The lines between traditional banks and fintech companies are blurring rapidly. Digitalization has turned anyone adopting an API-based business model into a fintech company. This is thanks to Banking as a Service (BaaS), which allows companies to offer banking capabilities directly to customers through embedded finance.

BaaS partnerships are common, with banks on the backend letting neobanks or payment service providers on the frontend offer banking capabilities to customers. This has turned tech companies outside the fintech space into fintech companies too. The revenue opportunities are there for banks ready to support the evolution.

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The global digital banking market size is expected to grow at a CAGR of 8.3% from 2021 to 2028. This growth is driven by the increasing demand for digital banking services, which offer convenience, speed, and efficiency. Customers now expect 24/7 omnichannel access to customer support.

The distinction between traditional banks and fintech companies was once clear, but it's now becoming increasingly blurred. The adoption of APIs and BaaS has made it possible for any company to become a fintech company. This is a significant shift in the banking industry, and banks need to adapt to this new reality.

The growth of digital banking is not just limited to traditional fintech companies. Any company adopting an API-based business model can become a fintech company too. This includes e-commerce marketplaces and rideshare apps, which are now offering banking capabilities to their customers.

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The payment network can be a powerful tool for promoting environmental sustainability. In 2004, the United Nations coined the acronym ESG to encourage investors to consider environmental, social, and governance factors in corporate valuations.

Cardholders can now understand how their financial footprints pertain to their carbon footprints thanks to carbon calculators in bank apps. These calculators combine consumer-permissioned spend data with merchant category codes to provide standardized estimated calculations of carbon emissions generated by purchases.

Spending tips within the calculator can help cardholders make environmentally responsible choices around sustainable consumption. By using these calculators, cardholders can make informed decisions about their spending habits.

Card-based donations can also help cardholders offset their carbon footprint. These donations can be one-off or recurring, or even dynamic "round ups" of individual purchases or percentages of total purchases.

The prevalence of unbanked and underbanked households varies significantly across different states in the US. According to data from 2013 to 2015, the portion of unbanked households has declined by 0.7% nationwide, while the portion of underbanked households has declined by 0.1%.

However, this trend is not consistent across all states. Some states, like Alabama, have seen an increase in the percentage of unbanked households, with a 3.3% increase between 2013 and 2015. In contrast, states like Alaska have seen a significant increase in the percentage of underbanked households, with a 6.8% increase during the same period.

Here are some specific state-by-state statistics on unbanked and underbanked households:

The banking industry is constantly evolving, and understanding consumer trends is crucial for anyone looking to manage their finances effectively.

The average U.S. savings balance is a good starting point for this discussion. A recent analysis shows that the average savings balance in the United States is around $5,300.

Many people use safety deposit boxes to store valuable items, but have you ever wondered how much it costs to rent one? The average cost of a safety deposit box is around $20 to $30 per year.

Banking statistics and trends are also worth exploring. For example, did you know that the number of mobile banking users has increased by 50% in the past year alone?

Here are some key statistics to keep in mind:

Customer experience is no longer just about providing good service, it's about creating a seamless and personalized experience across all channels. 70% of customers consider a consistent customer experience across all channels to be extremely important.

In today's digital age, customers expect a frictionless experience, with 50-70% preferring digital banking services to manage their finances due to convenience, speed, and efficiency. This shift towards digital has grown by 40% in the past few years.

To meet these expectations, banks need to migrate and enhance their digital customer experience with continuous improvements like omnichannel customer interactions, AI-assisted chatbots, and customer data integration across channels.

Customer experience trends are constantly evolving, and understanding them is crucial for businesses to stay ahead.

Accenture's global study of 49,000 consumers reveals growing customer dissatisfaction and industry fragmentation, leading consumers to seek out new providers.

Most consumers use their bank's digital channels for quick functional tasks only, suggesting that digital channels are functionally correct but emotionally devoid.

A recent survey by McKinsey revealed that digital interaction in banking has grown by 40% in the past few years.

Customers expect a consistent customer experience across all channels, with 70% considering it extremely important.

Organizations lack access to deep customer data, with 47% identifying it as one of the biggest obstacles in achieving CX success.

Banks need to integrate technical advancements like AI, machine learning, automation technologies, and agile support software to resolve issues proactively.

Relying only on surveys is not sufficient to measure customer experience; a closed-loop approach is needed to capture, interpret, act, and monitor feedback.

Customer feedback can be used to identify areas of frustration, such as long wait times or confusing online processes, and implement changes to address these issues.

Your Performance is a critical aspect of delivering exceptional customer experiences in the retail banking industry. With BAI's comparative analytics, financial services leaders can assess deposit performance, forecast improvements, and capitalize on market opportunities.

More than 135 million consumer households are measured each year, providing a comprehensive view of the market. This insight helps financial institutions evaluate their performance and make data-driven decisions.

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A unique market intelligence tool used by financial institutions monitors near real-time feedback on consumer deposit growth. Weekly reporting allows for quick assessment of strategic and marketing initiatives.

This dashboard provides a monthly, executive-level view of analytics on consumer deposit account performance. Consumer deposit balance flows, account growth and retention, and weighted average rates are all relative to competitors.

Using BAI Consumer Benchmarking data, financial institutions can forecast improvements, capitalize on market opportunities, and identify how to balance their product mix with precision.

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