Slideshow Digital banking's key trends: Demand, competition, mobile on the rise

  • April 19 2018, 12:30pm EDT

Digital banking's global strides

In both the richest and poorest countries, banking around the globe is going digital and mobile.

Two global studies — a study of 150,000 consumers polled by Gallup for the World Bank for its Global Findex Database, and a survey of 5,200 consumers by the tech giant Oracle — found complementary trends in the use and adoption of digital banking.

Whether by necessity or choice, customers want more digital options for accessing banking, both reports determined. For example, 60% of customers globally want to open a bank account online, according to Oracle's survey.

Many are already there: Sixty-seven percent of customers globally are on digital banking platforms now, according to Oracle; the World Bank reports that 515 million customers worldwide opened a banking account through a mobile money provider in the last three years.

While traditional firms still enjoy an incumbent trust advantage over competitors, the Oracle survey noted banks lag when consumers weigh alternatives: Customer experience, the survey said, is becoming a factor in determining which banking option customers will settle on.

The increased popularity of digital banking has opened customers up to alternative providers, too, Oracle reported, with over 30% of respondents stating they would consider giving banking fintechs a try.

Overall, the increased use of digital banking is resulting in more access globally, the World Bank study noted, with 140 million unbanked individuals opening their first-ever account to receive digital payments in 2017.

Customers everywhere want to log in

There should be no doubt now that banking customers around the world want (and prefer) digital options to manage their savings and take up new products, Oracle's survey finds. Overall, 67% of global respondents said they were active on digital banking platforms already.

Content Continues Below

Passport for digital platforms

When it comes to trying out digital platforms, Americans are somewhere between very receptive and uninterested, according to Oracle. Over 80% of Indian and Chinese consumers reported an openness to new digital platforms. The U.S., at 67% openness to new digital platforms, was ranked seventh overall.

For payments, borders keep falling

Digital payments are plugged into a growing global banking trend, the World Bank study notes. Since 2014, the number of adults making or receiving digital payments overall has increased 11 percentage points, the study found. In developing countries, 44% now use digital payments.

Digital gateway to banking

Almost 70% of adults around the world now have a bank account, according to the World Bank. Last year, 140 million unbanked individuals opened their first-ever account to receive digital payments for their government jobs, the organization's study notes, including 35 million women. The figure emphasizes the role that public institutions can play in increasing bank access in developing countries by using digital payments.

Content Continues Below

Banking at home

According to the World Bank, Americans have increased some of their banking activity. Since 2011, the number of U.S. adults with bank accounts has increased 6 percentage points, and savings are up 8 points in the last three years. And the vast majority of American adults either sent or received digital payments last year, the study found. Disparity in banking exists in the U.S., too. Account ownership is limited to 79% of adults among the poorest 20% of households, according to the World Bank.

A red flag for PFM

Consumers aren't satisfied with personal finance management and investment options offered by traditional banks, according to Oracle, reporting that more than 40% of its survey respondents said nonbank alternatives could help them better with these needs.

Room for tech contenders

Whether it is all-digital banks, millennial-focused apps or tech giants, banking consumers around the world are increasingly considering fintech options for their banking, Oracle reports. Over 30% of its global survey respondents said they have never used a challenger bank or fintech but would be open to banking with one.

Content Continues Below

Trust advantage: Banks

When weighing traditional banks versus alternative banking options, banks win on trust, Oracle’s survey finds. Digital-first banks rank low among customers globally on the issue of stability. But traditional firms fall behind competitors when customers are asked which option delivers the best experience, and the best returns on their savings.

Mobile even more important

Whether in Nairobi or New York, the impact of mobile devices on banking cannot be understated, the World Bank's study found. One key statistic: Fifty-six percent of all adults around the world are using mobile devices to check their bank accounts. Within America, 70% of all adults use a mobile device to check their bank accounts, versus 39% of all Chinese adults and 45% of all Russian adults.