Experience Oriented Digital First Banking

Digital First Banking

Loading

Digital-First Banking Tracker® Series

What’s Inside

04 Excellent Experiences Are No Longer Optional
Find out why personalized experiences will separate the
winners from the contenders in the digital-first banking future.

10 Customization Puts Power In Consumers’ Hands
Customized mobile dashboard apps are helping consumers control their spending.

16 Personalized Digital Banking Builds
Consumer Trust And Loyalty
Digital banking is already mainstream and will only grow,
but winning consumers’ hearts with the technology is a
more human matter. Learn why inside.

22 Why Some Consumers Are Not Ready For
Digital-Only Banking
Satisfaction with their current arrangements is consumers’ top rationale for sticking with their traditional banks,
but the digital customer experience could make all the
difference.

© 2022 PYMNTS All Rights Reserved

Digital-First Banking Tracker® Series

|

3

24 Keeping Small Businesses Afloat With
Personalization And Automation
Small businesses are often forced to make do with limited
resources, but personalization and automation can help
level the playing field.

28 Banks Up Their Investments In Personalized
Digital Experiences
Bank of America increases its spending on digital technology, and Truist Financial Corporation announces a new
digital banking app.

30 The Competition For Digital-Only Consumers
Is Just Beginning
Competition among FIs, FinTechs and banks is about to heat
up. Traditional banks presume dominance at their peril.

32 About
Information on PYMNTS and NCR Corporation.

Acknowledgment
The Digital-First Banking Tracker® Series is produced in collaboration
with NCR Corporation, and PYMNTS is grateful for the company’s support and insight. PYMNTS retains full editorial control over the following
findings, methodology and data analysis.

© 2022 PYMNTS All Rights Reserved

4

|

Digital-First Banking Tracker® Series

Digital-First Banking Tracker® Series

|

5

Need To Know

Excellent
Experiences Are
No Longer Optional
The importance of digital
banking is about to grow.
Spurred by the closure of nearly 3,000 physical branches in
the United States in 2021, customers say they expect 61% of
their banking business to be digital by 2024, with the biggest
increases consisting of more ATM- and mobile-facilitated
transactions.

© 2022 PYMNTS All Rights Reserved

Technology has made the
customers a lot stickier than
they used to be. And I think that’s
playing to our advantage.
Source: https://www.spglobal.com/marketintelligence/en/
news-insights/latest-news-headlines/us-bank-branchclosures-increase-38-to-new-record-high-in-2021-68483121

­ EFFREY DEUEL
J
CEO and president

© 2022 PYMNTS All Rights Reserved

6

|

Digital-First Banking Tracker® Series

Need To Know

With branch closures a
common trend, consumers
have had to rely on
technology to bridge the gap.
With 1,262 bank branch closures across the first two quarters of
2022, an increased number of banks have been adopting a “branchlite model” to develop more digital, technology-focused banking
hubs. Consumers have had to adapt to this shift by embracing digital channels.
All age groups are making digital-only banks their primary financial
institutions (FIs), with younger, more tech-familiar generations the
most likely to do so.
Complete adoption of digital-only banking services is a long way off,
however, with just one in 10 consumers having their primary accounts
with digital banks.

Digital-First Banking Tracker® Series

|

7

Consumers who are very or extremely
interested in making their primary
accounts digital-only, by generation:

31%

of Generation Z

41%

of millennials

42%

of bridge millennials

29%

of Generation X

8%

of baby boomers and seniors

© 2022 PYMNTS All Rights Reserved

© 2022 PYMNTS All Rights Reserved

8

|

Digital-First Banking Tracker® Series

Digital-First Banking Tracker® Series

|

9

Need To Know

Much of consumers’ hesitancy to switch their primary accounts to
digital has to do with the banking experience, with 35% of consumers saying that digital-only banking makes it “harder to bank” and
38% lacking trust in this channel.
While the branch is unlikely to disappear altogether, digital banks
have a major opportunity to win consumers’ trust by becoming more
customized and experience-oriented. Consumers want highly personalized banking experiences, with 62% in a recent survey saying they
are even willing to share more personal information to get more relevant communications from their FIs. Providing experience-oriented
banking is one way for financial services companies to differentiate
themselves in a crowded field.

Reasons why consumers hesitate to
switch to digital-only banking:
47%
47%
41%

Data security
0000000047

Switching frictions
0000000047

Fraud risk
0000000047

A recent study from Keynova Group finds that consumers are
eager not only to begin using mobile banking but also to personalize their experiences. Banks such as BMO Harris, Fifth Third,
Truist and U.S. Bank are achieving standout satisfaction scores
by offering features such as quick links to transfers, payments
and statements as well as savings progress on their digital app
dashboards. These options not only help customers improve
their financial health but also win their trust and loyalty. Fortyone percent of banks on the study’s Mobile Banker Scorecard
now offer personalization of their apps’ dashboards, compared
to just 30% just 12 months ago.

38%
35%
11%
10%

Trust issues
0000000047

Harder to bank
0000000047

Worse online banking
0000000047

Worse mobile banking
0000000047

Source: https://www.pymnts.com/study/digital-banking-nonbanks-mobile-banking-services-payments/

© 2022 PYMNTS All Rights Reserved

© 2022 PYMNTS All Rights Reserved

10

|

Digital-First Banking Tracker® Series

Digital-First Banking Tracker® Series

|

11

News And Trends

Customization
Puts Power In
Consumers’ Hands

© 2022 PYMNTS All Rights Reserved

Customized banking app dashboards
help users control spending
Banks are rolling out personalized insights and customized app
dashboards for online and mobile banking users. These new dashboards display up-to-date account information and allow for
quick navigation to frequently used features, making the mobile
customer experience easier and more useful. Additionally, banks
are using notifications to help keep their customers on top of
things, with 29% of banks already sending proactive notifications to let customers know if they have low cash balances or
are at risk of overdrafts. For those looking to track their spending habits or income sources, nearly half of the mobile apps
allow consumers to break down their cash flow. The tailored
insights generated by these features have the power not only to
boost customers’ financial health but also to humanize the digital experience, leading to long-term trust and loyalty.

© 2022 PYMNTS All Rights Reserved

12

|

Digital-First Banking Tracker® Series

News And Trends

Millennials, SMBs and
financially stressed are
most likely to prefer
digital-only banks
A recent PYMNTS study found that while just one in 10 consumers banks primarily at a digital-only FI, interest is on
the rise for a number of demographics who find these entities better aligned with their needs. More than half — 57%
— of millennials and bridge millennials say they are very or
extremely interested in using digital banks in the next 12
months. Moreover, the consumers most likely to make digital-only banks their primary FIs were millennials and bridge
millennials, small- to mid-sized business (SMB) owners and
consumers experiencing financial hardship. Lower costs,
faster transfers and more convenient, easier transaction
experiences comprised the biggest reasons for consumers’ interest in switching to digital banks. PYMNTS’ data also
found that 85% of freelancers, 84% of millennials and bridge
millennials, 83% of small business owners and 78% of consumers who live paycheck to paycheck with issues paying
bills already use digital banks.

© 2022 PYMNTS All Rights Reserved

Digital-First Banking Tracker® Series

|

13

The consumers most likely to have their
primary financial accounts at
digital-only banks, by generation:

17%

of bridge millennials

16%

of millennials

16%

of freelancers or independent contractors

16%

of small business owners or self-employed

14%

who live paycheck to paycheck with issues
paying bills

Source: https://www.pymnts.com/study/
mainstreaming-digital-banking-consumer-finance-fintechs/

© 2022 PYMNTS All Rights Reserved

14

|

Digital-First Banking Tracker® Series

Digital-First Banking Tracker® Series

News And Trends

Convenience, personalized
experiences drive interest in
bundled banking

Consumers want banks to
bundle their offerings
Source: https://www.pymnts.com/study/
bundled-banking-products-innovationdigitization-consumer-finance/

50%

of consumers prefer to have their
accounts with a single FI.

© 2022 PYMNTS All Rights Reserved

|

15

Banks are being encouraged to bundle up, a trend that has
nothing to do with the weather. Convenience and personalized experiences have become the watchwords in banking
as consumers navigating economic hardships increasingly
want all their financial accounts in a single, easily accessible place. Nearly 50% of consumers prefer to have all their
accounts with one bank, and 71% said ease and convenience are what motivate their interest in bundled banking.
Forty-two percent of consumers said they would be somewhat more likely to leave a bank that had not bundled its
offerings, spelling trouble for banks that do not consolidate these services.

71%

42%

of consumers say ease and
convenience motivate their
interest in bundled banking.

of consumers say they would be
somewhat more likely to leave
a bank that did not bundle its
services for their use.

© 2022 PYMNTS All Rights Reserved

16

|

Digital-First Banking Tracker® Series

Digital-First Banking Tracker® Series

|

17

PYMNTS Intelligence

Personalized Digital
Banking Builds
Consumer Trust
And Loyalty
Consumers both want and need to engage
with their FIs digitally, but they want these
interactions to be highly personalized.

© 2022 PYMNTS All Rights Reserved

Branch closures rendered digital banking a necessity, and
now it is a permanent fixture of the business landscape.
Banks closed 9% of their branches in 2021. While these moves
were in response to pandemic-era decreases in customer
demand for in-person banking, this shift has created a new
need for digital services to take the place of amenities previously accessed via a branch. A recent Citizens Financial Group
survey found that most consumers now do at least some of their
banking digitally, and more than 70% view their digital shifts as
permanent.
Most consumers are at least curious about digital banking.
Fifty-nine percent of consumers say they are at least somewhat
interested in trying digital banking over the coming 12 months,
and 36% say they are very or extremely interested in this. The
most common motivation is faster and easier transfers followed
by lower costs and fewer fees. Younger generations are leading the pack.

© 2022 PYMNTS All Rights Reserved

18

|

Digital-First Banking Tracker® Series

PYMNTS Intelligence

Consumers are highly willing to use digital banking, but they may
not be fully won over yet.
More than 70% of banking customers in every geographic region and
age demographic are willing to consider digital channels. An equal
share — 70% — of customer service interactions now occur on mobile,
nearly twice as many as in 2017. Despite this apparent endorsement,
mobile service use was nearly 10 percentage points higher than customer preference in 2021, indicating that banks still have work to do
in fully converting customers to digital and mobile services.
A yearning for more personalized banking experiences is
widespread, especially among younger consumers.
A survey of 3,000 global consumers found that banking customers are seeking more personalized mobile experiences that offer full
service anytime, anywhere. More than 80% of Gen Z consumers surveyed want to be able to take care of even complicated tasks using
digital channels, such as completing loan applications or adding personal details to a profile to obtain tailored product recommendations.
Ninety-eight percent of consumers surveyed also want fast answers
to their banking questions, yet 58% say their FIs have granted them
this experience.

Digital-First Banking Tracker® Series

|

19

Share of consumers who are very or
extremely interested in using a digital
bank in the next 12 months:

45%

of Generation Z

57%

of millennials

57%

of bridge millennials

39%

of Generation X

13%

of baby boomers and seniors
Source: https://www.pymnts.com/study/
mainstreaming-digital-banking-consumer-finance-fintechs/

© 2022 PYMNTS All Rights Reserved

© 2022 PYMNTS All Rights Reserved

20

|

Digital-First Banking Tracker® Series

PYMNTS Intelligence

A positive technology experience leads to consumer trust — but
sometimes human interaction is needed.
Banks that are unable to provide their customers with good experiences are unlikely to have customers say they trust them. Banks
can also promote a trusting relationship with their clients by knowing when to move from a digital interaction to a human one. When
an issue is not immediately resolved, 41% of consumers surveyed say
they want to be able to switch from a chatbot to a customer service
representative from inside the messaging application.
While digital banking’s convenience is here to stay, the human
touch will remain essential to an excellent customer experience.
While there is no going back to the pre-digital era, the ability to
interact with other humans, whether in person or through a virtual
channel, is still a core necessity for most bank customers, especially when accessing financial advice and working through complex
transactions. Two-thirds of both consumers and businesses prefer
human interaction and know-how when receiving any kind of financial advice. Combining the human touch and a positive technology
experience is how digital FIs can retain customers in this highly competitive environment.

© 2022 PYMNTS All Rights Reserved

Digital-First Banking Tracker® Series

|

21

Providing an exceptional digitalfirst banking experience goes well
beyond a fancy interface. To deliver
the experiences consumers want,
financial institutions need to know their
customers via the mountains of data
they collect, demonstrate that they
know them through relevant, timely
offers and services and wow them with
a frictionless digital experience. The
financial institutions that do this best
will stave off attrition and be in a prime
position to onboard new accounts and
customers.

DOUG BROWN
President

© 2022 PYMNTS All Rights Reserved

22

|

Digital-First Banking Tracker® Series

Digital-First Banking Tracker® Series

|

23

Chart Of The Month
FIGURE 1:

Some Consumers
Are Not Ready
For Digital-Only
Banking.
Here Is Why.
The most-cited sources of hesitation include satisfaction with their current banks, the desire to
be able to access physical branches for in-person
transactions and distrust of primarily digital banks.
Concerns with digital, such as difficulty accessing
customer service, challenges with the technology
and inconvenience of use, also ranked in the double
digits, however, suggesting that the digital customer
experience is key.

© 2022 PYMNTS All Rights Reserved

What holds
consumers back
from digital-only
banking
Share of consumers
who identified select
reasons for not being
interested in using a
digital bank in the
next year

I am satisfied enough with current
banking and financial service
provider setup.
33.6%
19.8%
53.4%

13.2%
23.9%
37.1%

0000000000

0000000000
0000000000
0000000000

I do not trust the reliability of
digital banks.
14.4%
20.7%
35.2%

0000000000
0000000000
0000000000

I am concerned for the overall
safety and security of money
and information.
14.8%
19.5%
34.3%

0000000000
0000000000
0000000000

It is harder to access customer
service or dispute charges.
2.0%
12.2%
14.2%

How Consumers Use Digital Banks,
September 2022
N = 897: Respondents not interested in using
a digital bank, fielded June 30, 2022 – July 7,
2022

0000000000

I want the ability to access a
physical branch.

Most important
Selected, but not most important
Total
Source: PYMNTS

0000000000

0000000000
0000000000
0000000000

There are challenges with using
technology.
4.1%
9.7%
13.8%

0000000000
0000000000
0000000000

© 2022 PYMNTS All Rights Reserved

24

|

Digital-First Banking Tracker® Series

Digital-First Banking Tracker® Series

Insider POV

Keeping Small
Businesses Afloat
With Personalization
And Automation

­GRANT SAHAG
Executive vice president

© 2022 PYMNTS All Rights Reserved

The most interesting
personalization
component is helping
small business owners
and consumers work
through complex
workflows.

|

25

An interview with Grant Sahag, executive vice
president at Novo, about how personalization
and automation tools help keep the smallest
businesses competitive

Enabling small businesses to thrive
Small businesses have always faced unique challenges, but now
these players need automated notifications, instant access to
dashboards displaying their financial data and transactions and
the ability to make payments in real time. Not having these
options could mean going out of business. These organizations
typically lack IT or accounting specialists, often relying on one
person’s grit to perform administrative tasks such as paying
bills day to day.
“[Small businesses] are essentially living paycheck to paycheck,”
said Grant Sahag, executive vice president at Novo, a banking
platform geared toward small businesses with three or fewer
employees. “The bills that these folks are trying to pay are not
just vendors; they’re trying to pay their electricity bills.”
Using a predictive financial tool that provides both automated
functions and personalized insights can sometimes mean the
difference between life and death for these small firms.

© 2022 PYMNTS All Rights Reserved

26

|

Digital-First Banking Tracker® Series

Digital-First Banking Tracker® Series

|

27

Insider POV

Keeping the cash flowing

Providing the tools for personalization

A decade ago, these kinds of tools were not available for small businesses or individuals trying to personalize their banking, but they
have become game-changers, Sahag said. Such tools learn the habits and identity of each user and begin to anticipate their actions,
speeding up transactions and simplifying processes. This technology
also allows customers to create dashboards that grant them better
visibility into the business’s cash flow and allow them to automate
transfers and payments.

If major banks fail to provide these tools, customers will find alternative ways to access the functionalities that personalization offers.

Eliminating barriers to personalization
Both banks and FinTechs face hurdles to personalization, said Sahag,
noting that most traditional banks have invested fewer resources
into this imperative than their more agile, tech-centric competitors.

“That is why [these tools] have been so disruptive [to the banking
market],” Sahag explained. “And that disruption feels [to customers]
like getting a more personalized experience.”
Sahag said these tools help ensure that companies of any size can
manage complex flows of currency and cut down on additional
administrative steps. Best of all, the tools help maintain small businesses that otherwise might not be able to manage their finances.
“One customer said, ‘You’ve allowed me to sleep easier at night
because I can pay my bills,’” said Sahag.

“[Legacy banks] are serving a very wide market. Even if they wanted
to provide a personalized experience, the amount of time it takes
is a barrier to entry. And in the end, it is really a data problem,”
said Sahag.
Additionally, the walled-garden model that many FIs use creates
a barrier, while FinTechs and neobanks that use an open banking
system tend to have access to better, more up-to-date data and
application programming interfaces that enable personalized, digital-centric experiences for their customers.

© 2022 PYMNTS All Rights Reserved

© 2022 PYMNTS All Rights Reserved

28

|

Digital-First Banking Tracker® Series

Digital-First Banking Tracker® Series

|

29

Companies To Watch

Banks Up Their
Investments In
Personalized Digital
Experiences
After a record 2.8 billion logins to digital accounts during Q2
2022, Bank of America is planning to boost its spending on
technology to further expand its electronic banking tools. The
bank has a record 55 million verified digital clients, and more
than 72% of the bank’s households actively use digital channels. BoA customers also sent 43% more Zelle transfers during
the second quarter than checks, and approximately 28 million
customers interacted with Erica, the bank’s virtual financial
assistant. Additionally, BoA has found that digital channels are
very popular with wealth management clients, as these consumers’ interactions with Erica have increased by 33%.

© 2022 PYMNTS All Rights Reserved

Truist Financial Corporation has announced Truist Assist,
a new mobile banking app and online banking platform
for its personal banking customers. The digital assistant
employs natural-language processing and understanding to answer queries and provide financial information via
app or online. Should a customer need a higher level of
assistance, Truist’s contact center is embedded, and the
platform offers a frictionless transition from the virtual
assistant to a representative when needed.

Australian bank Westpac intends to launch a simplified
digital mortgage process allowing customers to obtain
unconditional approval in roughly 10 minutes. Digital mortgages will be available near the end of 2022 for select
customers refinancing through Westpac’s Flexi First Option
home loan. Westpac will expand this to a greater number
of consumers through the 2023 calendar year.

© 2022 PYMNTS All Rights Reserved

30

|

Digital-First Banking Tracker® Series

What’s Next

The Competition
For Digital-Only
Consumers Is Just
Beginning
As banks move to a more virtual and digital world, one
trend of which FIs should take note is that consumers
now say they do not consider their primary FIs to be
the providers they trust the most to deliver financial
services. PayPal is number one as the most trusted
provider, with 42% of consumers in 2022 ranking it
as such. Overall, U.S. FIs struggle with maintaining
consumer trust in an increasingly challenging market.
That trust is harder to gain via digital channels, where
fraud risk is higher and consumers can easily switch
providers. It is thus key that FIs get the experience
right every time to retain customers.

© 2022 PYMNTS All Rights Reserved

Digital-First Banking Tracker® Series

|

31

Digital experience expectations
among consumers have grown
exponentially. And brands like
Amazon, Delta Air Lines and Apple
have brought forward the gold
standard for the digital experiences
consumers expect from every brand
they interact with. To provide that
same gold-standard experience,
financial institutions need to be agile,
utilize their abundance of data and
have a digital-first mindset across
the entire organization.

­DOUG BROWN
President

© 2022 PYMNTS All Rights Reserved

32

|

Digital-First Banking Tracker® Series

Digital-First Banking Tracker® Series

About

|

33

Disclaimer
PYMNTS is where the best minds and the best content meet
on the web to learn about “What’s Next” in payments and
commerce. Our interactive platform is reinventing the way
in which companies in payments share relevant information
about the initiatives that shape the future of this dynamic
sector and make news. Our data and analytics team includes
economists, data scientists and industry analysts who work
with companies to measure and quantify the innovation that
is at the cutting edge of this new world.

Digital-First Banking Tracker® Series may be updated periodically. While reasonable efforts are
made to keep the content accurate and up to date, PYMNTS MAKES NO REPRESENTATIONS
OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, REGARDING THE CORRECTNESS, ACCURACY, COMPLETENESS, ADEQUACY, OR RELIABILITY OF OR THE USE OF OR RESULTS THAT
MAY BE GENERATED FROM THE USE OF THE INFORMATION OR THAT THE CONTENT WILL SATISFY YOUR REQUIREMENTS OR EXPECTATIONS. THE CONTENT IS PROVIDED “AS IS” AND ON AN
“AS AVAILABLE” BASIS. YOU EXPRESSLY AGREE THAT YOUR USE OF THE CONTENT IS AT YOUR
SOLE RISK. PYMNTS SHALL HAVE NO LIABILITY FOR ANY INTERRUPTIONS IN THE CONTENT
THAT IS PROVIDED AND DISCLAIMS ALL WARRANTIES WITH REGARD TO THE CONTENT, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, AND NON-INFRINGEMENT AND TITLE. SOME JURISDICTIONS DO NOT ALLOW THE
EXCLUSION OF CERTAIN WARRANTIES, AND, IN SUCH CASES, THE STATED EXCLUSIONS DO
NOT APPLY. PYMNTS RESERVES THE RIGHT AND SHOULD NOT BE LIABLE SHOULD IT EXERCISE ITS RIGHT TO MODIFY, INTERRUPT, OR DISCONTINUE THE AVAILABILITY OF THE CONTENT
OR ANY COMPONENT OF IT WITH OR WITHOUT NOTICE.

NCR Corporation is a leader in banking and commerce solutions, powering incredible experiences that make life easier.
With its software, hardware and portfolio of services, NCR
enables transactions across financial, retail, hospitality,
travel, telecom and technology industries. NCR is headquartered in Atlanta, Georgia, with 34,000 employees and
does business in 180 countries. NCR is a trademark of NCR
Corporation in the United States and other countries.

PYMNTS SHALL NOT BE LIABLE FOR ANY DAMAGES WHATSOEVER, AND, IN PARTICULAR, SHALL
NOT BE LIABLE FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR INCIDENTAL DAMAGES, OR
DAMAGES FOR LOST PROFITS, LOSS OF REVENUE, OR LOSS OF USE, ARISING OUT OF OR
RELATED TO THE CONTENT, WHETHER SUCH DAMAGES ARISE IN CONTRACT, NEGLIGENCE,
TORT, UNDER STATUTE, IN EQUITY, AT LAW, OR OTHERWISE, EVEN IF PYMNTS HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
SOME JURISDICTIONS DO NOT ALLOW FOR THE LIMITATION OR EXCLUSION OF LIABILITY
FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, AND IN SUCH CASES SOME OF THE ABOVE
LIMITATIONS DO NOT APPLY. THE ABOVE DISCLAIMERS AND LIMITATIONS ARE PROVIDED BY
PYMNTS AND ITS PARENTS, AFFILIATED AND RELATED COMPANIES, CONTRACTORS, AND
SPONSORS, AND EACH OF ITS RESPECTIVE DIRECTORS, OFFICERS, MEMBERS, EMPLOYEES,
AGENTS, CONTENT COMPONENT PROVIDERS, LICENSORS, AND ADVISERS.