It can be tempting to view online banking as the inevitable future of the sector. For many people, digital services are not only their preferred way of managing their finances, but the only way. This is particularly true in developing markets, where services such as mobile banking reach parts of the world that were considered inaccessible or not cost-effective just a few years ago.
Yet despite the rush towards online services, banks shouldn’t forget that not all their customers will be on board with this. As the negative headlines that inevitably come every time a bank announces branch closures show, there are plenty of people who aren’t prepared to swap a teller for a web portal just yet.
Even if they are a shrinking part of a bank’s base, these consumers remain too numerous to be ignored. Assuming that everyone will naturally make the transition to digital banking at their own pace will be a mistake, and may see banks lose customers as people turn to financial institutions who they feel can better cater to their needs.
The reasons for shunning online services
It’s often assumed that customers who have not yet embraced online banking will mainly be the older generation, who may not have familiarity with or trust in these offerings. However, while there’s some truth to this, it’s not the whole story.
Figures from Statista show, for instance, that only 60.5 percent of baby boomers in the US use digital banking services1 – a figure that is expected to be essentially unchanged in the coming years. By comparison, 76 percent of millennials use such services2 – so almost a quarter of young consumers are still either unwilling or unable to use digital banking.
One reason people may avoid digital services is the perceived security concerns and a lack of trust that banks will be able to keep their personal details safe. This is something that financial institutions can look to tackle by highlighting their efforts in this area, but it’s far from the only reason that some people still shun digital.
The lack of a personal touch is another key factor. As the Telegraph recently reported, being able to have a conversation with a human and discuss their accounts in simple terms is still a strong draw for many people . One customer, Gail Richmond, told the publication: “I can do certain things on the computer, such as email, but I still have to ask for help with other things … I just like speaking to a human being. If you want a loan, for instance, you can go in and see someone – people do like that.”
The best approach for banks
This can leave banks in a tricky position. Naturally, they will want to continue promoting the digital services that will be a cornerstone of their future strategy, but doing this without alienating their customers will demand close attention.
To address this, many banks are making efforts to educate their customer base in order to assuage concerns about issues such as security, as well as give people the confidence they need to move to online channels. However, while this can certainly go a long way to assisting those who may want to use such services, but don’t feel they understand them, there will always be some for whom the personal, in-branch touch is irreplaceable.
This is why notions that branches will eventually be replaced entirely by online services will be wide of the mark for the foreseeable future. The need for a personal touch to guide customers through more complex processes will always exist. In the branch, this may mean increased use of technology such as video tellers as more functionalities shift to self-service kiosks in order to ensure that every customer can interact in the way that’s best for them.
1Statista: Share of Baby Boomers using digital banking in the United States from 2014 to 2019 (premium content)
2Statista: Share of Millennial digital banking users in the United States from 2014 to 2019 (premium content)