New research has revealed that Australians are increasingly comfortable using digital channels and preferring to apply for credit cards, personal loans, and mortgages online.
A survey by financial services data firm RFi Group and technology specialist GBG has found that a massive 88 percent of Australians won’t return to their pre-pandemic branch usage.
The report highlights how the coronavirus pandemic has driven long-term changes in consumer behaviour and how consumers’ trust in digital financial services compares to their level of comfort with in-branch banking.
The research concluded that Australians are changing the way they engage with financial institutions and banks, shifting away from in-branch services and in-person financial consultations and towards a digital-first way of managing their finances.
“Eighty-eight percent of consumers can see no resumption of their branch usage post-pandemic, either indicating their pandemic branch usage will be the norm or predicting a further reduction in their branch visitation,” said the report, which surveyed 6000 people.
Online mortage applications growing
A key area of digital growth is in mortgages, where consumers have typically been reluctant to apply for mortgages online but where comfort and preference is now increasing. The research found that at least 32 percent of people taking out a mortgage in the past two years did part of their application online,
A solid 39 percent of respondents said they would now be comfortable completing and submitting a mortgage application entirely via a digital channel. The number rises dramatically for younger consumers. Close to half of mortgage borrowers aged under 35 now say they are happy to apply for a mortgage using digital channels.
Interestingly, there has been rapid adoption of digital banking by older consumers who were forced by Covid to avoid personal contact. The proportion of consumers aged between 45 and 54 using a mobile banking app jumped from 45 percent in March 2019 to 59 percent in September 2020. The proportion of consumers who are older than 55 who do so jumped from 26 percent to 33 percent over the same period.
RFi’s managing director of consulting, Alex Boorman, said, "Our research shows that consumers have not only shifted to more digital ways of banking and managing their money, but they’re also unlikely to return to pre-pandemic behaviours any time soon. There is a growing level of comfort in remotely and digitally interacting with a bank or financial institution that is presenting both opportunities and challenges for financial services providers.
However, although the major banks are closing branches as branch traffic drops, Boorman is not convinced the future of banking is entirely branchless - he doesn’t think that’s realistic. But while branches will always play role in customer engagement, banks need to enhance the branch experience.
The question for Boorman is whether digital channels replicate everything a branch has to offer. “Digital channels can get close to the branch experience by live chat, video chat and zoom, he argued. However, he went on to say, there is a question mark over whether consumers consider these to be perfect substitutes for the opportunity for personal interaction.
The consultant thinks it is a bit early to suggest that every consumer in the short to medium term - and maybe even in the longer term - will only interact with a bank and only apply for a product through digital channels.
Boorman noted that consumers are exposed to more identity fraud and financial crime threats than ever before. “Financial institutions will continue to be challenged by the need to simultaneously keep customers protected, sustain digital trust, and deliver frictionless customer experiences,” he said.
According to Carol Chris, GBG general manager Australia, unlike going back to a favourite restaurant or visiting a local cinema, Australians aren’t looking forward to returning to physical bank branches. “The pandemic allowed Australians to explore how financial services could be accessed more conveniently through digital and mobile products, and consumers are now demanding financial institutions to find ways to make these products the new norm, in even more efficient, easy to use, and frictionless ways.”
Chris noted that with three-quarters of Australians already conducting the majority of their banking on a smartphone or computer, digitisation is already in full swing across the financial services industry and our everyday lives. “The high receptivity to fintech and neobank services is a clear indication of the preference for a different standard of hassle-free and seamless customer experiences.”