New Zealand leads on digital banking

  • By Christine St Anne

New Zealand leads the way in digital banking compared with other global markets with growing opportunities for greater mobile banking usage particularly among older consumers.  

Speaking at RFi Group’s Global Digital Banking Conference in New Zealand this week, RFi Group research director Kate Wilson (pictured) presented key findings on the market following a global survey of consumers across ten markets including Australia, US, UK and China.

The survey revealed that on average 80 per cent of New Zealanders use digital banking on a weekly basis compared with 69 per cent of consumers in other markets.

However, there is room for growth in mobile banking app usage in NZ among older consumers, according to Wilson.

“Digital banking is not just for millennials. While millennials are more likely to use mobile apps compared with other generations, there is still appetite for digital banking across the channels,” she said.

Channel evolution

Here, Wilson revealed a “channel evolution” where all consumers are becoming more comfortable using all forms on digital banking from web browsers to mobile apps.

While around 70 per cent of millennials used mobile apps on a daily basis compared with only 17 per cent of older New Zealanders, Wilson added that the sizeable gap provided banks with the opportunity to further engage with this market.

“Older consumers are starting to shift from performing tasks such as account transfers on their web browsers to using their mobile apps.”

Importantly, digital savvy consumers tended to have more products with a bank.

“A daily digital habit can lead to greater cross-sell and greater customer advocacy,” she said.

As highlighted in the graph below, digital engaged customers tend are higher promoters -of their main financial institutions.

Source: RFi Group

“We don’t see the same increase in net promoter scores with frequency of branch usage,” she said.

“Consumers tend to recommend a mobile app rather than a specific product offering. They are comfortable talking about financial services but the focus is around the digital experience."

Wilson also assessed the potential for disruption in the New Zealand market particularly with the growing fintech market.

Globally, almost two-in-three consumers are comfortable using a digital-only provider

Not surprisingly China and India led the global markets in terms of consumer comfort with fintech providers – 80 per cent and 75 per cent respectively.

Banks safe from disruption

However, consumers in New Zealand are less likely to be comfortable using a digital-only provider (12 per cent) and are also less likely to be comfortable using a fintech provider.

Wilson highlighted providers such as Alipay and India’s Paytm - digital only bank- as increasing consumer awareness for digital only services in their respective regions.

Wilson noted that it would be “interesting to assess the impact on consumer perceptions” as the fintech market in New Zealand grows.

"Traditional providers in NZ are not (yet) in danger of disruption from fintech or new digital-only challengers, but this could change quickly."

Like Australia and Europe, the New Zealand market is also moving to an open banking market and Wilson provided the market with some lessons garnered from European and Australian consumers.

“Consumers already see value in open banking and are open to learning more about products and services that utilise open APIs.”

Consistent in all markets is the issue of trust, with consumers trusting their banks most with using their data.

“Like other markets, banks in New Zealand, have an opportunity to seize first mover advantage and use open banking to innovate.”