The COVID-19 pandemic has changed a lot over the past year and a half, and according to FICO that includes reducing the reluctance of consumers to open digital bank accounts.
New research released today by FICO, found that 71% of U.S. respondents are now willing to open an account via app or website.
Although most would assume the younger generations are driving this trend, the evidence shows otherwise. The idea of a tech-savvy generation does not always extend into financial services, especially since younger consumers are not as financially literate as older consumers. A majority of consumers between the ages 18-24 prefer digital banking, but nearly a third (29%) prefer slower, friction-filled methods such as phone calls or mail to open a bank account. Yet, this trend does not extend into the older generations: Only 6% of older consumers apply by phone call, 1% apply by mail.
The results of this study show a clear need for financial institutions to offer services and education programs tailored to bolster young consumers’ financial confidence. Darryl Knopp, senior director Portfolio Marketing and former Head of FICO Advisors Digital Practice, agreed with this statement. “Many financial institutions focus on encouraging more senior customers to use digital services, and while this is necessary, financial services providers also should not presume that older age groups aren't ready to use digital services or that younger customers automatically can," he said.
Typically, younger generations are quick to learn new apps, considering how confident they are with technology, but they are new to the convoluted world of finance. FICO’s study shows that less than half (49%) of U.S. respondents under the age of 25 were comfortable downloading a financial institution’s app for banking, yet more than half (54%) of those over the age of 65 were comfortable downloading a provider’s app.
Additionally, trends show that the older the age group (particularly over age 45), the stronger the preference for using a website over an app.
"Customers want to master their financial lives,” said Nikhil Behl, chief marketing officer at FICO. ”Banks can help them do that by anticipating their needs and meeting them where they are with the kind of information and services they're looking for."
The top accounts that customers were prepared to open were credit cards (71%), cell phone billing (64%) and personal financial accounts, such as checking and deposits (62%). However, customers were more hesitant in opening mortgages (24%), personal loans (24%), or "buy now, pay later" accounts (23%) digitally. This may be due to the fact that customers trust credit cards and bank accounts more than newer products, like the “buy now, pay later,” accounts.
Learn more about consumer banking trends at https://www.fico.com.
