Consumers Care More About Your App Than Your Branches

The quality of a financial institution’s mobile app is now more important to consumers than the quality of its branches, according to a new research from payments company Marqeta.

The survey of more than 2,000 U.S. and UK adults found that 62% of Americans do most of their banking online, 69% expect to use their mobile banking app regularly in the next three months and 67% said it wouldn’t inconvenience them if their financial institutions closed all of their branches tomorrow.

“Mobile banking apps have surpassed physical branches as the most critical touchpoint of the banking experience,” the company noted.

“This research shows that the vast majority of consumers act digital-first and mobile-first when interacting with their banks. This upends how banks need to think about the market, with an app and a card accounting for almost all banking interactions,” Marqeta Chief Marketing Officer Vidya Peters added. “This shift has paved the way for an entirely new cohort of digital-only banks and is a large driver behind why Marqeta sees modern card issuing growing into an $80 trillion opportunity by 2030. But it also puts huge demand on new innovators to get their offering right, attracting in consumers with a reliable banking product they can feel confident and secure in.”

Despite the apparent consumer indifference toward physical locations, the Marqeta survey also found that consumers are still hesitant to make digital-only financial institutions their primary banks. Only 14% of American respondents said they used digital banks exclusively, though almost half (46%) used a digital banking service alongside their more traditional financial institutions.

Although people are re-evaluating their banking options more than ever before (only 17% said they’re completely satisfied with their traditional banks and 30% have considered changing banks this year), digital banks have to do more to win consumers’ trust and confidence, Peters noted.

More than half (54%) of the American respondents in the Marqeta survey perceived digital banks as riskier, and almost half (48%) said they would limit how much money they would deposit into a digital-only financial institution.

Marqeta also reported that 41% of the people who used digital-only financial institutions as their sole banking providers experienced a bank error in the past year — almost double the 21% of people using traditional financial institutions who said they experienced an error.

Though most of the survey respondents (74%) said they would consider going with a digital-only financial institution if they were ever to switch banks, few may actually act on it. One in five said switching financial institutions was too much work, a quarter said it was too disruptive and 15% said they didn’t know where to start, according to the data.