Consumers demand a digital banking experience with security at its foundation

The global transformation of banking and payments has only accelerated over the past few years, and between web trends and a global pandemic, the industry has seen disruption from all angles. Consumers are digitally connected in almost all facets of their lives — and it’s evident they expect the same from their banks and payment experiences, with consumers overwhelmingly expressing a preference for digital offerings from their financial institutions.

Amid this critical time for banks and credit unions, Entrust set out to uncover how this disruption has impacted consumer sentiment, preferences, and habits in its data study.

Entrust surveyed 1,350 consumers from nine countries, including the United States, Canada, United Kingdom, Germany, Saudi Arabia, United Arab Emirates, Singapore, Australia and Indonesia, who have made or received digital payments in the past 12 months. The results help paint a picture of where the banking industry stands in 2022, and what the future holds.

“This study highlights how more than ever, consumer banking is about digital interactions first, and that they must create that digital experience with security at its foundation,” said Jenn Markey, VP of product marketing at Entrust.

“Our study found both an overwhelming preference for online banking and a significant concern about fraud – in fact, more than two-thirds of consumers in our survey changed their bank or credit union after receiving a fraud or privacy alert. It’s clear that financial institutions must meld rich digital experiences with proven security measures such as biometric security solutions to increase consumer trust and loyalty.”

The dawn of the digital banking experience

Each section of the study considers a different aspect of the transition in the banking and payments industry as more digital, contactless options become available for consumers. Here are some of the key findings from each section:

Omnichannel touchpoints are increasingly important in digital banking

88% of respondents said they prefer to do their banking online in some form – clear evidence that digital banking is the new norm. However, it is still essential to provide a variety of digital options, as 59% said they prefer using the app from their bank or credit union, while 29% prefer their desktop web browser.

Some people do still prefer in-person banking, such as at a branch (8%) or at an interactive teller machine (3%). Overall, it is essential for banks to offer omnichannel, digital-first solutions to resonate with today’s consumers.

Customers are security-conscious and lack of security can have damaging consequences

90% of respondents said they were concerned about the potential of banking or credit fraud as banking and credit become more digital. Many respondents had personal experience with these fraud risks, with 42% saying they have received notification of a personal banking or credit fraud in the past 12 months. These incidents clearly damage customer loyalty, as 67% of respondents notified of fraud changed their bank or credit union as a result.

Fee structures and flexible payment options give banks an edge

Consumers are most likely to consider lower fees, digital solutions and security when choosing or changing their bank. With consumers looking for high-quality, low-cost digital banking, challenger banks could add to their current disruption by offering things like fee-free overdraft protection and unlimited foreign exchange.

There is widespread interest in the digital banking atmosphere, with 86% of respondents from the U.S. saying they would consider using a branchless online banking service for their banking. Additionally, challenger banks offer new ways to pay, and 52% of respondents said they would consider using digital currencies for payments.

More digitally issued cards could further fuel the rise of contactless payments

Respondents listed credit/debit cards with chips (50%) as their most preferred payment method, but contactless credit/debit cards (48%) were a close second. Additionally, 53% of respondents said they’ve received a digitally issued debit or credit card from their bank or credit union.

Digital cards can be an effective selling point as almost two-thirds of survey respondents prefer to open a bank account digitally. This preference is high across generations as well: Gen Z (65%), Millennial (69%) and Gen X (54%).