During the pandemic, Australians were forced to use online banking over branches and, as a result, there has been a continuous string of banks shutting up their physical branches. Now, a new report suggests that 88 per cent of Aussies won’t care, as they’ve well and truly embraced the digital banking age. So is this the beginning of the end for bank branches?
The new research by GB Group (GBG) and Retail Finance Intelligence Pty Ltd (RFi) showed the majority of Australians are embracing the age of digital banking, with 88 per cent saying they won’t go back to their pre-pandemic branch usage. The report comes as many banks grapple with the decision to close branches across the country.
ANZ announced last month that they would be closing down 15 regional bank branches, a decision that came just two months after the bank shut 19 branches, with many other banks following suit.
While the industry has slammed the decision, saying the bans are “deserting communities around Australia”, the new research suggests that Australians now prefer to apply for credit cards, personal loans and even mortgages through digital channels, and shows the country has shifted away from in-branch services.
“By discouraging face-to-face interaction, Covid-19 has resulted in consumers being more comfortable using digital channels for a wider range of tasks and experiences and using digital channels in greater numbers, more often and more broadly across generations,” the report stated. “As a result, consumers are now more expectant of intuitive, frictionless experiences when interacting with financial institutions. Experiences that do not, for example, require them to visit a branch, provide physical documents or interact with a member of staff.”
The report found that during the pandemic, 40 per cent of consumers completed a banking task via digital banking that in other circumstances they may have performed by non-digital channels, while 88 per cent said they would not resume traditional ways of managing their money. The report also highlighted that it wasn’t just younger generations embracing the digital age, with older consumers also rapidly adopting the digital channels in a bid to “catch up with their younger peers”.
According to the report, the proportion of consumers aged 45-54 using a mobile banking app increased from 45 per cent in March 2019 to 59 per cent in September 2020. The proportion of consumers aged 55+ who do so increased from 26 per cent to 33 per cent over the same period.
Carol Chris, regional general manager Australia at GBG, said digitisation was already in full swing across the financial services industry, with three-quarters of Australians already conducting the majority of their banking on a smartphone or computer. “It’s clear that, unlike going back to a favourite restaurant or visiting a local cinema, Australians aren’t looking forward to returning to physical bank branches,” she said.
“The pandemic gave Australians an opportunity to explore how financial services could be accessed more conveniently through digital and mobile products, and consumers are now demanding financial institutions (FIs) to find ways to make these products the new norm, in even more efficient, easy-to-use and frictionless ways.”
Alex Boorman, managing director of consulting at RFi, said consumers were “unlikely to return to pre-pandemic behaviours any time soon”, however that meant the banks needed to focus on keeping consumers safe from identity fraud and financial crimes. “There is a growing level of comfort in remotely and digitally interacting with a bank or FI that is presenting both opportunities and challenges for financial services providers,” he said.
“While digital-first approaches allow FIs to more deeply engage with customers and streamline their product delivery, a digital-first consumer is exposed to more identity fraud and financial crime threats than ever before. FIs will continue to be challenged by the need to simultaneously keep customers protected, sustain digital trust, and deliver frictionless customer experiences,” he added.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.
Starts at 60 Members get a whole lot more value here. It’s free to join and you’ll get:
What are you waiting for?