As bank branches become increasingly inaccessible, mobile banking engagement increased by more than 50 percent in the last two months, according to new research from MX.
People comprehend the importance of preparing for unexpected events like COVID-19. In a survey of more than 1,000 U.S. consumers, more than 70 percent of people said that it’s important to put money away for a rainy day or for unexpected expenses.
The same research shows the amount that consumers are putting toward paying off their credit cards decreased by more than 25 percent in the last two weeks. That means they are increasingly holding on to their cash, as they carry more revolving debt.
“Americans are turning to mobile banking as a way to take control of their finances and plan for their economic future,” said Ryan Caldwell, founder and CEO of MX.
“With increased consumer engagement across mobile banking applications, financial institutions have the responsibility to not only deliver a great user experience, but also to provide meaningful advice and guidance that’s critical to the financial well-being of customers, especially during times of economic uncertainty. It all starts with clean financial data.”
Banks have responded to the crisis by offering fee waivers and deferred payments for credit cards, auto loans and mortgages. Some financial institutions are offering loan modifications, and low-rate and zero-rate loans and other accommodations.
Nearly 60 percent of people say that their primary financial institution doesn’t help them become financially stronger. This can change if they adopt more digital banking solutions.
On the FI side, many institutions are feeling the strain of not being fully ready with their digital offerings. Only 43 percent of banks and credit unions thought they had high or very high readiness in the category of mobile technologies, with 19 percent stating they had a low or very low level of readiness, according to the Innovation in Retail Banking 2019 report,
Banks are also evolving their marketing and sales messaging during the crisis. "You can’t be selling. This is tough for our industry because it’s always about the product," said Salesforce's svp of financial services, Rohit Mahna, on the Banking Transformed podcast.
"This is the one time when you have to take a step back and say, ‘This is not about the product, this is about the household or this is about the small business.’ Right now, it is about understanding what the exposure is for each customer. How can we help them with that? If we do well by the customer, they will bring more of their business to us in the future when times are better."
Other findings: People are responding to the heightened uncertainty in the market by safeguarding their finances and adding to their emergency funds.
- More than 50 percent of Americans attribute going over their budget to monthly living expenses (e.g. mortgage, rent, utilities or auto loans), with 1 in 4 Americans exceeding their budget primarily on entertainment and luxury items.
- Less than 20 percent of Millennials and 25 percent of Baby Boomers say they typically stay within their budget
- 50 percent of people attribute insufficient income as the single biggest impediment to increasing their savings, while 30% cite essential living expenses.