US consumers love digital banks – why is the EU stalling?

Consumers in the US are following their counterparts in Europe and turning away from branch banking after a slow start. Meanwhile Europeans, who have been more advanced in their digital bank journey, now appear to be hitting a plateau with almost one in three EU consumers saying they still prefer to pay with cash.

While two-thirds of Americans, or some 220 million people, are projected to hold digital bank accounts by 2030, there has been much discussion about how far those accounts are used compared to traditional, in-person branch banking.

The phenomenon of “digital ghost” accounts is familiar in Europe, with Revolut’s chief executive claiming that “UK consumers don’t like us for some reason” in an interview with The Times of London in early May 2023.

In brief, the impression has been that consumers will sign up for digital services – but end up using their traditional bricks and mortar bank.

US digital appetite confirmed

New work from NetBase Quid confirms that US consumers are now showing real appetite for digital banking and payment services.

While almost one in three Americans now use digital banks exclusively, the popularity of app-based services for those using both digital and physical banking is growing fast.

NetBase’s research says that the most popular apps are budgeting and tracking tools (used by 91 percent of digital banking customers), followed by peer-to-peer payments (90 percent), ATM locators (76 percent) and transferring funds between accounts (74 percent).

Europe: the end of the affair?

If the US, which was slower to digital, is finally waking up to its potential, then further signs of saturation are appearing in the more advanced European market.

In the UK, research from Accenture suggests just one in ten consumers currently use their digital bank account as their main account- barely a quarter of all account holders.

What’s more, one in three UK account holders still prefer to do their banking in person, rising to almost half (44 percent) of those over 55.

Payments Cards & Mobile Opinion:

Don’t bank on a fully digital future. Amidst the hype of recent years, the reality of consumer intransigence is making itself felt.

While the US may be waking up to the power of digital, the more advanced markets of Europe are now seeing its downside, not least in terms of privacy concerns and what happens in the event of a technical system failure.

Most recently, the UK has joined Norway and Sweden in guaranteeing the right to access cash, while Swiss citizens look set to reject a move to all-digital payments in an upcoming referendum.

As our own research and other sources have confirmed, consumers are far from ready to take the leap from mixed payment methods to all-digital – and PSPs and banks should be planning for an “omnichannel” future, rather than pure digital.

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