Better Rates and Security: The Driving Forces Behind Direct Deposit Switches

MX’s latest research found that 89% of consumers use direct deposit today, with the majority depositing the full amount into one account. Because direct deposit plays a significant role in the lives of the vast majority of consumers — and a key component in every financial institution’s growth strategy, better understanding these consumer behaviors can create a powerful opportunity for financial providers.

MX’s recent survey of 1,000+ U.S. adults reveals how consumers currently use direct deposit and what might push consumers to switch their direct deposit.

Today’s Direct Deposit Use

Across generations, most consumers deposit their entire direct deposit into a single account. Baby Boomers lead the way with the highest percentage (85%) that use a single account. 

Among younger generations, consolidating to a single account appears to be on the rise. When we asked the same question more than a year ago, only 59% of Gen Z said this. Today, 64% of Gen Z say this — a 5-point increase during this time. 

The Data Behind Direct Deposit Switches

Sixty percent of consumers say they have never switched their direct deposit to a different financial institution. So, how can you encourage consumers to switch? 

Although the majority of consumers have never switched their direct deposit, 44% of consumers say a cash incentive would encourage them to switch their direct deposit account.

More broadly, consumers care about how a financial provider can benefit and protect them. When asked what is likely to make them switch their direct deposit, the top 3 factors for consumers are:

• Ability to earn higher interest rates (42%)
• Concerns about fraud (15%)
• A data breach or privacy concerns (13%)

Of those who have switched a direct deposit, the most popular reason was money motivated — 28% of consumers switched to an account that earns a higher interest rate. 

Beyond providing strong interest rates and security, financial institutions should focus on delivering an easy, convenient way for consumers to make a direct deposit switch. Our broader research report shows consumers crave simplicity and convenience. Read the full report to learn more. 

Consumer behaviors surrounding direct deposit use and switch are complex. By offering higher rates and better security, financial institutions may win the war on deposits and gain primacy among their customer base.

Check out MX's latest research report for more insights into what consumers expect from their financial providers today.