Mobile payment rates, active digital bank users, and chatbot deployment are some of the numbers on the rise in a report from Alkami and Cornerstone Advisors. The Digital Banking Performance Metrics report compiles data from 81 financial institutions, including 39 banks and 42 credit unions, with an average asset size of $4.6 billion.
Some findings come with little surprise. Active digital banking users as a percentage of checking accounts rose from 74% to 77%. Of those financial institutions reporting mobile payment activity, the percentage of digital banking users making mobile payments through a mobile app surged from 22% to 34%.
The institutions best positioned for growth have seen and prepared for the future. Cornerstone Advisors’ senior consultant Elizabeth Gujral said that process begins with locating and making sense of your data.
“It’s important for financial institutions to figure out how to get that data because we always talk to our clients and ask if they’re top of wallet and the primary card,” she explained. “If you don’t even have the data on mobile payment usage, how do you know if you’re (it’s not top of wallet anymore) top of digital wallet? It seems like many institutions don’t know because they don’t have that anywhere accessible.”
Rising digital spends merit closer scrutiny
Financial institutions will be more closely scrutinizing their growing digital spending. In 2022, the average digital spend per $1 billion of assets was around $200,000. That has nearly quadrupled today to almost $780,000. Of the institutions that participated in the study in each of the last two years, the average digital spending increase was 310%. Digital channel spending rose from 23% in 2023 to 26% in 2024.
“One of the reckonings that might come in the future, this year or next year, is 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. Are we seeing more people log in every week? Are we seeing more people use mobile devices? P2P?’”
AI, chatbot use rising
More digital spending will be earmarked for machine learning, AI, and related technologies. By 2024, 42% of financial institutions had deployed machine learning. By the end of 2024, more than half will be using generative AI.
Chatbot use nearly tripled from 8% to 23%. The number of financial institutions offering live chat increased to 63% from 51%. The average monthly live agent and chatbot transactions surged from 1,847 to 3,165.
“If you put it out there, they will come when it comes to chat,” Gujral advised. “Ensure you’re appropriately staffed to handle those volumes. Chatbots can only handle so much, and then, at some point, you will have to want to talk to a real person. What is the process of getting them to a real person? Either you also have a live chat option, which many of them do, or you’ll have to give them that message to call the contact center.”
Have P2P payments peaked?
Has P2P payments peaked? Active P2P payment users as a percentage of digital banking users held steady. However, the average number of transactions from active users nearly doubled. Those who have established a relationship with Venmo or Zelle will likely stay with them, especially if switching accounts is cumbersome.
Some digital numbers are dropping
Other findings are interesting:
- The total active online banking users as a percentage of checking accounts dropped by 8%;
- The percentage of online banking users who were active dropped 3% to 66%;
- The overall percentage of checking account holders who are active mobile banking users only increased 1% between 2023 and 2024;
- The total active online banking users who used the digital banking system within the past 90 days, as a percentage of checking accounts, dropped 8%;
- Digital consumer loan applications as a percentage of total applications dropped to 41% from 47%;
- The percentage of checking accounts opened digitally dropped 3% to 16% of total activity in 2024;
- Among digital banking users, 29% were active bill pay users, down a percentage point from the previous year.
Gujral was surprised at some of those low numbers. For example, research conducted only one year ago found that almost 80% of Americans considered mobile deposit capabilities critical or important. That’s not translating into use. The poor interest in these options could be due to a poor user experience.
A drop in digital checking account openings as a percentage of total checking accounts could be due to a shortage of progress on digital account opening applications. While many institutions spoke about adding new systems, far fewer followed through.
Attracting Generations Z and Alpha with digital experiences
Institutions must make it easier for people to transact, especially Generation Z and Generation Alpha, whom Gujral already tracks.
“If you tell a 20-year-old they need to open an account but can only do it by going into the branch, they’re probably not going to choose that institution,” she said.
Generation Z wants the Chime experience. Anyone desiring to mimic that must remember the golden rule – don’t make the customer think.
Properly market to your desired demographic. Then, get them through the door by providing a seamless, simple experience that offers the inducements they are used to from other sectors.
Now that you’ve figured out Generation Z breathe deeply because it’s time to prepare for Generation Alpha. For them, a branch may be little more than a billboard. If they can do everything else in their lives online, why not all of the banking?
“For younger generations, the concept of community is no longer as physical as it once was,” Gujral said. “I think that will be challenging for many lending institutions to evolve.”
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