In 1914 an economist named William Scott wrote a book about banking called Banking. In his book, Scott outlined the four main services that commercial banks performed: The safekeeping of money and other valuables, the making of payments, the making of loans, and the making of investments
While the primary functions of a bank may not have changed over the past 200+ years, the methods of performing these services have transformed dramatically. The early banking systems were all about about paper and locality, while the 21st century Information Age caused the banking industry to shift towards data and networks.
What have remained constant since the banking industry began in the 1790s are the customer needs. Banking customers want to be sure they can access their money easily and quickly. They also want some form of a relationship with their bank; they need trust and personalization, which in the early days meant face-to-face interactions with their banker.
Fast forward to 2021, and a global pandemic has accelerated digital banking and forced banks to evolve at an exponential speed to create more effective and efficient ways to meet these consumer needs. Allison Beer, Chief Product Officer and Head of Customer Experience and Digital for Chase, believes the three primary digital banking trends in 2021 will be around Automation, Personalization, and Real-Time Payments.
“Customers want resolution in the channel of their choice. If they come into a channel, they want to complete their transaction there,” Beer says. “We’ve been rapidly ensuring the customers can self serve digitally. Not only do customers want to be able to manage their financial life all in one place, which they can do with the Chase Mobile App, but they want us to manage it for them. So we’re seeing more customers ‘setting and forgetting’ auto payments.”
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According to the Chase 2021 Digital Banking Trends, a significant benefit of automation to customers is the ease of saving.
- 80 percent surveyed have made changes to their savings approach due to COVID-19. But roughly half (40%) look forward to contributing more to savings accounts next year. And the majority shared their plans to contribute at least once a month
- Today 66 percent of Chase customers surveyed in the latest Digital Banking Attitudes study contribute to a savings account by manually transferring funds from checking to savings
- However, an overwhelming majority (91%) of customers who have already begun to use Autosave agree that it is an easy and convenient way to save without thinking about it, and stay accountable (83%)
- And 84 percent of Chase customers using Autosave agree that they plan to continue using it as part of their approach to savings, with more than three-quarters (77%) agreeing that Autosave helps them feel like they are staying on track to meet savings goals
A real-time payments system is composed of technology that enables instantaneous money transfer between banks and banking systems. Payments can be made around the clock, 365 days a year and the funds are available immediately.
The Chase study shows that consumers are embracing P2P payment solutions beyond being able to instantly pay a friend or split a bill. People also appreciate that P2P payment solutions make it easier to track spending in a safe and convenient way
- Giving It A Try: Thirty percent of P2P users have signed up just in the past six months
- A Growing Routine: Nearly half (45%) of longer-term users are using this form of payment more often than a year ago—and the trend will continue. Nearly 40 percent saying they definitely will use digital payments in the coming 12 months
- Why They Love It: Consumers equate digital payment tools with benefits such as convenience, ease-of-use and saving time. Generationally, the highest adoption is still primarily rooted in sending money to others when they need it. Gen Z and Millennials are embracing use cases like splitting a bill more often than Gen X and Boomers
- Clean Hands: Safety is another reason that consumers are relying on digital payment tools instead of cash. 13 percent of surveyed customers cited avoidance of paper money and physical cards as one of their top three reasons for using digital payment tools during the pandemic.
- Tools Change: Another trend to watch is the potential decline in mobile wallet usage compared to P2P and online digital payment apps. Mobile wallet usage to pay in-store is down 16 percent compared to Q4 2019, impacted by COVID-19 restrictions throughout the year.
Personalization is key, according to Beer. “For our channels to work really well for our customers, they need to be personalized for them. One of our most popular features is Snapshot, which is an easy to digest daily overview of customers’ daily transactions and personalized financial trends. We are able to provide insights into how customers are spending, which they really appreciate.”
- Four out of 5 surveyed Chase customers reported that they prefer to manage their money digitally
- Consumers not only crave, but require, personalized experiences in all of their daily digital interactions and banking is no different
- The study found that fraud alerts are the most important online banking feature among consumers at every financial stage. People want convenient features that also get smarter over time in order to protect their assets
- Consumers, especially Gen Z and Millennials, want a variety of money management resources and tools to help them make more informed decisions around how they spend, save and earn. These two groups overwhelmingly (99% Gen Z and 98% Millennial) use apps for budget tracking, viewing monthly spend forecasts and tracking progress against
Beer says these trends are growing, but are not new. “We were seeing these trends before 2020 but the pandemic just accelerated it. Going into 2021, we’ll see these trends sticking as more customers will use digital channels as their primary banking channel.”