Cash Is Losing Relevance as Digital Gains Traction
Digital experiences are becoming the preferred method for consumers—for everything from communication, and entertainment, to purchases—across various industries, including banking. According to a 2018 study by Citi, almost half (46%) of consumers – including nearly two thirds of millennials (62%) – have increased their mobile banking usage in the last year. Eight out of 10 consumers (81%) are now using mobile banking nine days a month, on average, while nearly a third (31%) mobile bank 10 or more times per month.1
Subsequently, the increase in digital banking has contributed to the decrease in cash usage. According to the Federal Reserve, “in just two years, from 2015 to 2017, the use of cash declined 10% in the US.” 2 The report goes on to say that “ATM withdrawals have declined by 3% from 2016 - 2017.” 2
In today’s quickly evolving digital age, consumers’ behavior is undergoing a fundamental shift where they are now turning to their devices when it comes to making payments or purchases rather than using cash or checks. Nowadays, it seems that everything is automated, you can pay your mortgage online, your car loan online, and every major purchase and day-to-day purchases are largely made with credit and debit cards. In fact, an ING Mobile Banking Survey shows that “38% of Americans would go cashless if they could.” 3
But what does this mean for financial institutions? In short, as more consumers turn to digital for their banking needs, financial institutions are well positioned to leverage the breadth and depth of their transactional data to create hyper-targeted and relevant offers that serve their customers—ultimately increasing satisfaction and brand loyalty.
When it comes down to it, digital, and particularly mobile, banking is good for business. According to a survey by the Economist “mobile banking takes the 24/7 experience to the next level by offering customers the option to bank checks with a smartphone camera, for example, or even transfer money to customers of other banks.” 4 The results of the survey go on to show that “72% of people [have used] a mobile phone in the last six months to conduct a bank transaction.” 4
And as it turns out, when people are able to access their banking information more readily, they’re more likely to feel in control of their finances. The 2018 study by Citi states that “mobile banking users are...experiencing convenience-related benefits offered by the technology. On average, respondents estimate that they save 45 minutes a month because of mobile banking (equivalent to nine hours a year), logging in while at home on the couch (75%), in bed (47 %) or at work at their desk (36%). 1
Financial institutions are waking up to the positive impact digital can have both for their institution as well as their customers. The Economist survey found that “49% of bank executives believed that the traditional transaction or branch-based bank model is dead, with digital cited as the reason why. Banks have to become multi-channel operations to survive, especially for customers who rarely visit a branch at all.” 4
With a decline in cash and the rise of digital, financial institutions have the opportunity to leverage all the data that comes with electronic transactions. With millions of transactions occurring at any given time, the amount of customer data is absolutely astounding. Financial institutions can transfer the knowledge they already have on customers to find ways that better serve them and position them as the primary financial institution. See how financial institutions are leveraging the power of MX to unlock the value within their data to really get to know their customers and turn financial interaction into meaningful relationships.