Although banks have hastened the adoption of technology and users’ interest in digital banking services is at an all-time high, customers still feel hesitant to switch to digital-only banking, a new survey has found.
A considerable share of the U.S. population is still apprehensive about taking advantage of digital payments owing to the risk of data breaches. They don’t want to switch their primary banking to digital-only players due to security concerns, says a new survey reportOpens a new window released by PYMNTS and Optherium.
A large chunk of respondents, about 82%, has accepted the digital banking service as their default payment method and have admitted to linking their accounts to any of the digital methods. The number of people who primarily bank via a mobile application is four times higher than those who visit a physical branch for their banking needs.
Even though banks have hastened the adoption of technology and users’ interest in digital banking services is at an all-time high, financial institutions have to go miles to win their due credence. About 49% of consumers still prefer online payment services from a large company and only 7 out of 100 intend to go all-in with online-only banks.
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Ease of use of data, mobile capabilities, data security, fraud prevention, and online capabilities are some of the reasons why 24% of respondents think they will choose digital payments as their primary banking method. However, 47.4% of survey respondents adduced data security as a significant concern for disinterest in switching to online platforms altogether. About 41% also stated the risk of fraud as the main reason for the reluctance to adopt a digital-only bank facilitated by large financial institutions.
People’s dependence on digital payments escalated in the past two years more than ever before. Banks need to continuously evolve and innovate for a steeper technology curve to cater to the growing dependence on online operations. This is possible by keeping in mind the data security needs of the customers, as 25% of them have pointed out data security as the main reason not to switch to digital-only banking services.
Quick Takeaways
The Age Factor: The older generation, consisting of baby boomers and seniors, is more likely to think of data security as the primary concern. Almost 75% of them are “slightly†or “not at all†interested in considering digital-only banking as a primary choice for payments. Generation X accounts for 25%, while millennials and Gen Z account for 16.2% and 17.8%, respectively, of people who are not interested in switching to digital-only banking.
Mobile Apps Usage: The survey also found that mobile apps are the most popular method of digital payments for around 41% of people. Computer-facilitated digital banking finished second with 26%.
Demands from Neobanks: 62% of the consumers said they would be satisfied if online banking services provide them with convenient and reliable solutions such as debit cards. To gain the trust of consumers, digital banks must satisfy the customers with traditional banking products.
Trust in Brand: About 48% of respondents said that big nonbank brands like Amazon and Apple would make them interested in banking if they entered the market.
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Conclusion
Despite the revolution in digital payments, there is still a long way to go as consumers perceive various security risks associated with payment methods. Besides, potential dangers like security vulnerabilities, fraud, and theft further aggravate consumers’ distrust towards such payment methods. As the world is learning more about the digital realm with many customers embracing digital banking, regulators need to adjust to the digital age to improve customer experience and also evangelize robust risk management strategies incorporating digital compliance and cybersecurity.
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