Mobile payment rates, active digital banking users and chatbot implementation are some of the rising numbers in a report from Alkami and Cornerstone consultants. Digital Banking performance indicators The report compiles data from 81 financial institutions, including 39 banks and 42 credit unions, with an average asset size of $4.6 billion.

Some results are not very surprising. The percentage of active digital banking users on current accounts increased from 74% to 77%. Among financial institutions reporting mobile payment activity, the percentage of digital banking users making mobile payments via a mobile app increased from 22% to 34%.

The institutions best positioned for growth have seen and prepared for the future. Elizabeth Gujral, senior consultant at Cornerstone Advisors, said the process begins with identifying and understanding the data.

“It’s important for financial institutions to understand how to get that data because we’re always talking to our customers and asking if they’re on top of their wallet and their primary card,” he explained. “If you don’t even have mobile payment usage data, how do you know if you’re (no longer top of the wallet) top of the digital wallet? It seems like a lot of institutions don’t know this because they don’t have it available anywhere.”

The rise in digital spending deserves closer scrutiny

Financial institutions will take a closer look at their growing digital spending. In 2022, digital media spend per $1 billion in assets was approximately $200,000. Today it has nearly quadrupled to nearly $780,000. Among institutions that participated in the study in each of the last two years, the average increase in digital spending was 310%. Spending on digital channels increased from 23% in 2023 to 26% in 2024.

“One of the calculations that might come in the future, this year or next year, is that they’re spending so much on digital, are they seeing an ROI from it?” Gujral asked. “’We just spent X amount on a new contract for the next five years. Do we see more people logging in each week? Are we seeing more and more people using mobile devices? P2P?’”

AI, the use of chatbots is on the rise

More digital spending will go into machine learning, artificial intelligence and related technologies. By 2024, 42% of financial institutions will have adopted machine learning. By the end of 2024, more than half will use generative AI.

The use of chatbots has almost tripled, from 8% to 23%. The number of financial institutions offering live chat increased from 51% to 63%. Average monthly live agent and chatbot transactions increased from 1,847 to 3,165.

“If you put it out there, they will come when it’s time to chat,” Gujral advised. “Make sure you have the right staff to handle those volumes. Chatbots can only handle a certain number of things and then, at some point, you have to want to talk to a real person. What is the process of getting them to a real person? You either have a live chat option as well, which a lot of them do, or you’ll have to give them that message to call the contact center.”

Have P2P payments peaked?

Have P2P payments peaked? Active users of P2P payments as a percentage of digital banking users remained stable. However, the average number of transactions by active users has almost doubled. Those who have established a relationship with Venmo or Zelle will likely stick with them, especially if switching accounts is difficult.

Some digital numbers are decreasing

Other results are interesting:

• Total active online banking users as a percentage of current accounts decreased by 8%;
• The percentage of active online banking users fell from 3% to 66%;
• The overall percentage of current account holders who are active mobile banking users increased by just 1% between 2023 and 2024;
• Total active online banking users who used digital banking in the last 90 days, as a percentage of checking accounts, fell 8%;
• Digital consumer loan applications as a percentage of total applications fell from 47% to 41%;
• The percentage of checking accounts opened digitally fell from 3% to 16% of total activity in 2024;
• Among digital banking users, 29% were active bill pay users, down one percentage point from the previous year.

Despite a stated desire to have mobile storage capability, Elizabeth Gujral said few use it.

Gujral was surprised by some of these low numbers. For example, research conducted just a year ago found that nearly 80% of Americans considered mobile deposit capabilities critical or important. This is not translating into use. The lack of interest in these options could be due to a poor user experience.

A decline in digital checking account openings as a percentage of total checking accounts may be due to a lack of progress on digital checking account opening applications. While many institutions have talked about adding new systems, far fewer have done so.

Attract Generation Z and Alpha with digital experiences

Institutions need to facilitate transactions for people, especially Generation Z and Generation Alpha, which Gujral already follows.

“If you tell a 20-year-old they need to open an account but can only do so by going to a branch, they probably won’t choose that institution,” he said.

Gen Z wants the Chime experience. Anyone who wants to imitate him must remember the golden rule: don’t make the customer think.

Market correctly to your desired demographic. Then, invite them in by providing a simple, seamless experience that offers the incentives they’re used to from other industries.

Now that you understand Generation Z, take a deep breath because it’s time to prepare for Generation Alpha. For them, a branch may be little more than an advertising billboard. If they can do everything else in their lives online, why not all their banking?

“For younger generations, the concept of community is no longer as physical as it once was,” Gujral said. “I think it will be a challenge for many lenders to evolve.”

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  Tony is a long-time contributor in the fintech and alt-fi spaces. Twice named journalist of the year at LendIt e winner in 2018, Tony has written more than 2,000 original articles on blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT’s Unchained, a blockchain expo in Hong Kong. Email Tony here.

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