ABA Data Bank: Mobile Banking Adoption Accelerates

By Tyler Mondres

Americans are increasingly relying on mobile channels to access banking services, according to the FDIC’s biennial How America Banks report. More than a third (34 percent) of American households reported mobile was their primary method of accessing their bank account in 2019, up 18.4 percentage points from the 2017 survey. Most of the growth in mobile banking appeared to come from online banking, which fell from 36 percent in 2017 to 22.8 percent in 2019. Despite the decline, online banking was the second most common method used by U.S. households.

Mobile banking was the primary method used for customers 54 years or younger, at households that make at least $30,000 per year, and across all ethnicities. Those aged 15 to 24 (62.9 percent) and 25 to 34 years old (61.7 percent) overwhelmingly prefer mobile channels. People of color also reported higher rates of mobile adoption. Multiracial households (45.5 percent) were most likely to bank via mobile devices, followed by Hispanic households (41.3 percent), Asian households (39.3 percent), Black households (37.2 percent), then white households (31.4 percent). American Indian or Alaska Native households were less likely (30.5 percent), though mobile was still their most preferred banking channel.

Some demographic groups, such as rural households or those aged 55 years or older, were more likely to turn to online or branch channels. However, mobile channel usage recorded double digit percentage point increases across every demographic category except for customers 65 years or older, whose mobile usage increased 5.7 percentage points from 2017.

The banking industry has read this message loud and clear: 50 percent of respondents in the Bank Director 2020 Technology survey identified digital as the most critical delivery channel to their bank’s growth strategy (46 percent said that digital and branch channels were equally important). Banks have already invested in robust digital capabilities over the years. Nearly half of all banks offer full or partial digital access for retail and commercial customers to make deposits or apply for loans.

The industry isn’t resting on its laurels. The median 2020 technology budget for banks was $900,000 this year, up from $750,000 in 2019. Improving the customer experience (81 percent) and improving online and mobile offerings (39 percent) were among the top three objectives driving banks’ technology strategies going forward.

The importance of digital access was further highlighted following the onset of the COVID-19 pandemic. Nearly all banks (97 percent) say the pandemic has further accelerated mobile adoption among their customers. This aligns with the results of a new survey conducted by Morning Consult on behalf of ABA, which found that mobile and online banking adoption increased 3 percentage points each after the pandemic (to 39 percent and 32 percent respectively).

In response to the pandemic, nearly two-thirds (65 percent) of banks improved their technological capabilities. Among these, 70 percent developed APIs specific to the Paycheck Protection Program; 39 percent developed customer facing virtual technology or interactive teller machines; 35 percent enabled digital loan applications for consumer or business loans; and 32 percent enabled digital deposit account opening for their retail and small business customers. More than half of banks also adjusted their technology roadmap due to the pandemic. Of these banks, 74 percent plan to further enhance their mobile and online capabilities.

American households have recognized and appreciate banks’ investments in improving digital access. More than four-in-five bank customers (83 percent) ranked their bank’s online and mobile experience as “excellent” or “very good,” according to the ABA/Morning Consult survey. That share rises to nearly 99 percent when including responses of “good.” Eighty-four percent of Americans strongly or somewhat agree with the statement that innovation and technology improvements by banks are making it easier for all Americans to have access to financial services. Given the growth of digital and online tools, 91 percent of Americans said that overall access to banking services today is “good,” “very good,” or “excellent.”

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About Author

Tyler Mondres

Tyler Mondres is senior manager for research at ABA and a frequent contributor on economic and fintech topics to the ABA Banking Journal.