The rise of challenger banks and the availability of digital tools have radically changed the world of banking and personal finance – and, with them, what consumers expect from banking.
But while there are more than 250 global “neobanks” to choose from, only an estimated 5% of them meet their customers’ expectations and manage to break even.
So how can today’s digital-only banks stay relevant in such a rapidly changing landscape? Here are the new priorities for users looking to choose their next bank.
First paychecks become a more common feature
Rising inflation and the financial scars left by the pandemic crisis have affected most households. So it’s no surprise that nearly 65% of Americans and a third of Britons are now living paycheck to paycheque.
To help households meet their bills and financial goals, online banks like SoFi began offering advance direct deposits from employers, so users can receive their monthly salary up to two days before it is due.
Since monthly bills and payments often arrive at the same time as salary payments (i.e. the last day of the month), receiving funds a few days in advance can help households better manage their finances and make more conscious decisions – like transferring a percentage of their monthly income to their savings account.
Users rely on 24/7 real-time digital customer service tools
Today, challenger banks in the US serve almost 40 million users, while in the UK more than 25% of people are now switching to digital-only banks.
Such a massive shift to online banking has only been possible thanks to digital customer service tools, which reduce the need for physical branches and provide 24/7 real-time support.
As cash transactions decline at a dizzying rate, consumers are looking for digital banks that offer tools such as live chats, educational resources (knowledge base), and social media interaction.
Data security and cybersecurity are more important than ever
As mobile and online banking tools continue to improve, manage the associated technological risk and cybersecurity remains one of the main challenges for the industry. On the other hand, for consumers, it has never been more important to know that their money, data, information and investments are safe.
Data encryption, multi-factor authentication procedures, malware protection, third-party service security, and emergency assistance are just a few of the important security features that customers expect today.
Budgeting and money management features are a given
As the cost of living continues to rise and more households struggle to meet their savings goals, money management apps have never been more popular.
But not all of these budget tracking apps are created equal, and security standards can vary widely from tool to tool.
Additionally, budgeting apps are not subject to the strict regulations that banks must adhere to. That’s why users increasingly value proprietary and in-house budgeting features they can trust.
Consumers expect user-friendly mobile apps and online banking portals
Consumers – whether private users or commercial organizations – expect advanced API features that enable secure, immediate and low-cost transactions. That’s why it’s no surprise that Open Banking is being adopted at an unprecedented rate and is already having an impact on retailers and consumers.
But users are also looking for very user-friendly, easy-to-navigate and intuitive banking websites and mobile apps. This means that banks must find and maintain a delicate balance between offering a simplified interface and providing a wide range of powerful features.
Users are still loyal – but to more than one bank
For consumers, finding an online bank they can trust has never been more important. And, for banks, retaining and retaining customers is critical to success, especially in today’s competitive environment.
But, while users may still associate with one long-term banking provider, they are no longer loyal to a single bank.
After all, thanks also to the great accessibility of online banking, consumers no longer need to choose between one account and another – they can easily partner with several banks and use the strengths of each to their advantage.