Every age group is going into banks more than it did before Covid, finds a new consumer survey. Chris Middleton reports on this and other findings that challenge banks and government policymakers.
While the consumer trend towards mobile, digital, and app-centric banking is clear, the relaxation of Covid restrictions has seen all age groups embrace in-branch banking more than they did before the pandemic.
A survey of 1,800 people by customer engagement services company Sykes found that more than half of US adults (55 percent) have visited a bank in person this year. This contrasts with the 23 percent who visited a branch before restrictions began in 2020: a 139 percent increase of in-person engagement.
The figures suggest that many people may be craving face-to-face service after months of lockdown, across every age group.
Over 58 percent of customers aged 18-34 say they have been into a bank branch this year, versus just 20 percent before the pandemic hit. By contrast, 54 percent of 45-54-year-olds have sought out in-person service this year, versus 24 percent prior to the beginning of Covid restrictions.
In short, more young people are going into banks than their parents are, and it isn’t because they were unable to before.
Overall, just 10 percent of all customers said they had not been into a bank at all in years. However, a recent survey by S&P Global found that 3,324 bank branches closed in the US last year, with Financial Services companies believing that the shift to digital is irreversible.
While 59 percent of customers accept that most of their banking needs can be met online or via mobile apps, depositing money into an account (38 percent of customers) and opening a new current or savings account (20 percent of customers) were the main drivers for in-branch service. Less than 10 percent of US consumers sought in-person financial advice.
Apps more popular than cards
Among other trends identified in the survey, mobile payment apps have proved more popular than contactless cards this year, with over 37 percent of customers using apps to buy goods “multiple times a week”, versus 34 percent using contactless cards as frequently.
Overall, 83 percent of customers now use mobile payment apps at least some of the time, with 75 percent using contactless credit or debit cards.
The biggest beneficiary of increased spending appears to be Amazon: 57 percent of US consumers report spending more on Amazon purchases during the pandemic, versus just 12 percent starting on-demand TV subscriptions, 11 percent spending more on food deliveries, four percent increasing their fitness spend, and seven percent forking out more for medical costs.
However, the survey contained a warning for banks and FinTech disruptors: asked what they would do if a data breach occurred at either their primary bank or mobile payments platform, 70 percent of customers said they would consider switching providers.
Sykes also sought customers’ views on automation. Overall, over 50 percent said they would be comfortable using an automated service to transfer money, but only 22 percent to apply for a mortgage or receive personal financial advice.
The crypto split
The one area where there is a clear generational split is in attitudes to cryptocurrencies.
Sykes found that only one quarter (26 percent) of those aged over 54 would consider (or have already started) replacing their primary bank accounts with crypto investments, while nearly two-thirds of the 25–34 age group (63 percent) said the same.
With many young people saddled with debt and property prices being too high for first-time buyers who lack family help, it is likely that the internet generation sees cryptocurrencies as an opportunity to make the money their parents made from houses and shares.
However, with rollercoaster crypto valuations mitigating against some coins’ use as money, international clampdowns on mining activities, and the growing use of crypto by cybercriminals and money-launderers, this trend is not without its risks.
Sixty percent of customers say that the pandemic has made them more serious about long-term savings. Thirty-four percent have moved their money into a high-yield savings account, over 25 percent into cryptocurrency wallets, and 25 percent into retirement options. By contrast, less than 21 percent have invested in the stock market.
With most public companies reliant on the value of shares, the impression is hard to avoid that a tipping point is fast approaching in Western economies, with falling interest in owning stocks and shares, notably among the next generation of investors.
As Covid-era financial assistance dries up for many people, the post-pandemic world may reveal deep-seated economic challenges for the West: waning consumer support for the stocks and shares that prop up the edifice, older generations sitting on their nest eggs, and many young people reliant on the performance of unregulated cryptocurrencies to dig them out of an economic black hole.
Banks and policymakers urgently need to get to grips with these trends to understand their implications for the future. Any large-scale dumping of crypto investments could have disastrous consequences for a generation.