More Lower Income Online Banking Users Complete Transactions in Person

Even as traditional financial institutions expand their digital offerings to compete with new digital-first institutions as well as integrated fintech processes, many consumers still find themselves required to go offline to complete interactions.

Data from the “2020 Digital Banking Insights” by the New York City-based Lightico, also showed some trends regarding the digital experiences for different segments of the population, specifically by income and gender.

The study found lower- to middle-income consumers had a more frustrating digital experience and were more likely to ask to complete transactions in person. The group is also more likely to change financial institutions for a better offering. According to the “2020 Digital Banking Insights,” 57% of lower- to middle-income households are more likely to receive direction to a physical branch, as opposed to 35% of upper-income households.

Lightico, which provides a customer experience platform, suggested, “It is important to note that many lower-middle income consumers are tomorrow’s upper-income households who have just started their careers, so the race to gain their business now is critical while they are more open to change.”

The good news from Lightico’s perspective is that financial institutions succeeding in offering a better digital experience – especially growing the services and processes completable in an entirely digital (and mobile) setting — stand to gain significantly from customers shopping around for a new financial institution. Thirty-nine percent of lower- to middle-income households are more willing to change financial institutions, especially for better digital offerings.

When asked “What would get you to switch banks?” across gender and income groupings, Lightico saw similar reasons for switching financial institutions, with digital and mobile offerings leading the pack. Broken down by category, the study found that account holders will switch for the following reasons: A great online and/or mobile experience, 77%; lower fees, 58%; and more physical branches or ATMs, 27%.

“As part of the trend toward a cashless society and increasingly better digital offerings, physical branches aren’t much of a selling point,” Lightico observed. This puts local and smaller financial institutions, which historically relied upon an easy-to-access physical presence to compete with larger national banks in their communities, at a disadvantage.

The study also asked: “What frustrates you most about applying for a credit card, loan or new bank account?” Lightico found for 66% of consumers surveyed, the frustration was physically going to a branch, but for 75% it’s filling out paperwork. “Digital is not just about daily interactions once consumers become customers. The onboarding process is critical and the continued necessity of interacting with offline channels is frustrating across groups,” Lightico reported.