Has the Pandemic Accelerated Digital Account Opening?

The pandemic has prompted banks around the globe to move quickly to meet evolving customer expectations. Unsurprisingly, it includes offering a stronger online presence and, in some cases, rapidly launching new digital banking capabilities. We wanted to understand precisely what consumers’ preferences were when it came to digital banking, and find out if banks’ customers were actually following the trend and were now more likely to use digital methods to open accounts, using providers’ websites or apps.

We polled opinion among 14,000 customers from across 14 countries. It quickly became clear that the pandemic's impact accelerated the transformation to digital for banks and financial services.

But the findings also suggest the blanket adoption of digital banking services may be premature and have a way to go.

Our survey revealed more than half (52%) of respondents were more likely to open accounts digitally compared to a year ago.

Many People Refuse to Forsake Branches

While the trend has largely moved in favor of digital adoption, a significant minority of around one in four (~25%), say they are now more likely than ever to use branches. In fact, around one in 10 (12%) say they are now less likely to turn to digital channels to open accounts.

This seems counter-intuitive, so why could it be happening?

A number of trends were noted:

• Because of the limited opportunities for face-to-face interactions driven by the COVID-19 crisis, customers are actually yearning for more human contact and are primed to return to branches as they reopen. They may even be concerned that if they don’t use branches they could lose them.
• The widescale rise of frauds and scams throughout the pandemic may have alerted people to new or perceived threats in digital channels they were not previously aware of. Face-to-face interactions in branches may feel safer.
• The desire to use digital channels doesn’t mean that people also want to stop using branches to open financial accounts altogether — because they want choice.

Young Adults Aren’t Leading the Drive for Digital Account Applications

It’s generally assumed that young adults, so-called generation Z, are the most digitally savvy. But for most countries this isn’t what our survey found - at least as far as financial services are concerned. Those in the youngest age group, the 18-24-year-olds, were actually the most reluctant to open accounts digitally in 12 of the 14 countries surveyed. Australia and New Zealand are the outliers with the youngest age groups there, being at least as likely as their older compatriots to show a preference for opening accounts digitally.

Iona Bain, finance expert and editor of The Young Money Blog, highlighted the trend during the FICO Identity Matters Podcast. She said: “I think there's a real myth that young people are exclusively banking online, and that they all embrace this new wave of digital only banking and that they know how to make the most of fintech.”

She says she believes only a small number of young people are “totally clued up” about digital finance. But even that number depends on a number of factors, including how comfortable they are with finance, and how much they’ve discussed money matters with family and friends.

“If you're a young person who is just not very comfortable talking about money and dealing with money, then you might decide [opening an account online] is just a bridge too far, outside of your comfort zone,” adds Bain.

She further notes that globally, younger people do not have such complex financial arrangements as older people, while not choosing digital channels could simply be related to access to (pricey) technology.

Learn More

To hear more about Iona’s interpretation of the survey results listen to the FICO Identity Matters Podcasts (also available on major podcasting platforms including Spotify, Deezer and Audible).

Survey results for each country surveyed are available in infographics:

Or there are more in-depth views in a series of e-books:

• North America – Covering Canada and USA
• UK
• South Africa
• Brazil
• Colombia and Mexico
• Australia and New Zealand
• Vietnam
• Indonesia
• Thailand
• Philippines
• Malaysia