Digital banking adoption

Have you ever thought about doing away with your traditional bank account and opting for a purely online option? While branchless banking is not the norm yet by far, it’s becoming increasingly popular with approximately 9% of Canadians saying they have an online-only bank account, according to the latest survey conducted by Finder.com.

While 9% may not seem like a lot of people, this equates to more than 2.9 million Canadians who bank online, with a further 4% (or roughly 1.3 million Canadians) planning to open an online-only account in the next year and another 3% (771,985 adults) to open an account in the next five years. This means that by 2026, 16% (almost 5 million Canadians) will have a digital-only account.

However, the bulk of Canadians are still in the dark about branchless banks, with 56% saying they don’t know what a digital-only bank is.

Women are slightly more likely to have a digital-only bank account than men

When it comes to gender, women have a slight edge over men when it comes to exclusively online accounts with 9% of women saying they have an account compared to 7% of men. While the number of men and women with digital accounts is expected to grow in the coming years, the gap is expected to remain the same, with 15% of women to have an account by 2026 and 13% of men.

Digital-only banking adoption most popular with 25-34-year-olds

People aged 25 to 34 lead the way for branchless banking, with 13% saying they have an account. Tied for second are 18 to 24-year-olds and over 65s, with 7% having an account.

Which country has the most digital bankers?

Brazil has the most digital bankers (32%), followed by Indonesia and Ireland (25% each), Vietnam (23%), and Switzerland and Poland (22% each). On the other end of the spectrum, the United States has the smallest percentage of adults with a digital only bank account (6%), followed by Canada (9%), Finland, Denmark and Mexico (11% each).

Mexico is expected to have the strongest growth in the number of people with digital only bank accounts from 2021 to 2026 – an increase of 21 percentage points. Brazil, Vietnam, Malaysia and the Philippines are all expected to see a growth of 18 percentage points.

Did digital banks lose customers as a result of COVID-19?

Of the 30 countries Finder looked at for this study, Finder had previously run the same survey in 12 of those nations and regions in 2020. Interestingly, 6 out of those 12 countries saw a drop in the number of adults who said they had a digital only bank account.

Germany had the largest drop of 9 percentage points. The Netherlands saw the second-biggest drop of 7 percentage points, while Spain and Mexico closely followed at 6 and 4 percentage points, respectively. Meanwhile, countries like Singapore and Malaysia saw smaller drops of 2 percentage points and less than 1 percentage point, respectively. Bucking the trend, Ireland actually had an extra 10 percentage points of adults with a digital bank account in 2021 compared to 2020, and Brazil had an extra 5 percentage points.

However, all countries are expected to see an increase again by 2026. On average, 28% of people worldwide will have a digital bank account within the next 5 years, up from an average of just 17% in 2021.

Mexico is set to see the biggest growth in digital bankers, with an additional 20% of Mexican adults planning to take out a digital bank account by 2026. The number of digital bankers in Brazil and Vietnam is also set to skyrocket, with an additional 18 percentage points of people set to open a wholly digital account in each country.

Meanwhile, digital banking adoption is moving at a slower pace in countries like France, Japan and the US, with 5% or less of the adult population in these countries expected to take out an account over the next few years.

Are men or women more likely to have a digital only bank account?

In 19 of the 30 countries surveyed, men are more likely to have a digital only bank account. Of these, the United Arab Emirates, Brazil, Finland and Japan had the biggest gender gaps of 8 percentage points each.

Meanwhile, in 9 countries, women are actually more likely to have an online-only bank account. Australia has a female-led gap of 3 percentage points, and Ireland and Canada both have a gap of 2 percentage points.

• 2020 report

  Have you ever thought about doing away with your traditional bank account and opting for a purely online option? While branchless banking is not the norm yet by far, it’s becoming increasingly popular with approximately 15% of Canadians saying they have an online-only bank account, according to the latest survey conducted by Finder.com.

  While 15% may not seem like a lot of people, this equates to almost 4.4 million Canadians who bank online, with a further 12% (or roughly 3.7 million Canadians) who are planning to open an online-only account.

  Men almost twice as likely to have a digital-only bank account than women

  There is a gender divide when it comes to opening an online-only bank account, with men (19%) almost twice as likely than women (10%) to have an account. As far as those considering opening an account with a branchless bank, the divide is not as wide with men (13%), who are slightly more likely than women (12%) to be considering opening an account at some point in the next 5 years.

  Digital-only banking adoption most popular with millennials

  You may assume that digital-only banking is more common with younger generations than older ones but the results are more complicated. While branchless banking is popular with millennials, as almost a quarter (23%) say they have a digital-only bank account, the adoption of online-only accounts with the newest generation, gen Z, is a full 10 percentage points less at 13%. This is less than the proportion of gen X (14%) and a little higher than baby boomers (9%).

  Digital-only banking most popular in Quebec, New Brunswick and British Columbia

  Close to 17% of those living in Quebec say they have a digital-only bank account, with roughly a further 16% saying they plan to open an account in the next five years. Online-only banking is also popular in New Brunswick, British Columbia and Ontario.

  Why are people opening digital-only accounts?

  For those who either have an account or are planning to open an account, convenience is the number one (53%) reason people open accounts. Other popular reasons include lower fees (46%) and the digital transfer of money (31%).

  Both men and women are after the same things in regards to online-only banking, with 56% of men and 48% of women valuing convenience as their top reason for seeking out a branchless bank. Lower fees are also popular with both men (45%) and women (47%), as was the ability to more easily transfer money, with 31% of both genders citing this as a reason to open an account.

  61% of gen Z chose digital-only banking for convenience

  Convenience is the number one reason for gen Z (61%), gen Y (54%) and baby boomers (52%) opening online-only accounts. Lower fees is the most attractive feature for gen X (52%).

  80% of Manitobans say that lower fees are why they’d use a digital-only bank

  Almost across the board, convenience is the number one reason Canadians say that they would use a digital-only bank, from 71% in New Brunswick to 56% of people in British Columbia. However, lower fees is the top choice for 80% of Manitobans and 53% of people from Ontario.

  But what about those who don’t want a digital-only bank account?

  “If it ain’t broke, don’t fix it” seems to be the main reason that most Canadians haven’t made or won’t make the change to an online-only bank, with 80% citing being happy with their current bank as the reason they won’t make the change. Other popular reasons include the ability to talk to someone in person (27%) and not trusting branchless banks (21%).

  Happiness with their current bank is the reason people stay put

  The number one reason for both men (83%) and women (77%) for staying away from digital-only banks is that they’re happy with their current bank. 27% of both men and women also value the option to talk to someone in person. Women are more sceptical than men of digital banking, with 24% of women saying they don’t trust online-only banks versus 18% of men.

  The ability to talk with someone in person is more important to boomers

  Once again, happiness with their current bank is the number one reason Canadians don’t want to make the switch to a digital-only option, with 84% of boomers, 78% of gen X, 77% of gen Y and 79% of gen Z citing this as their reason for not making the switch. Interestingly, the ability to talk to someone in person was more important to boomers compared to other generations, with 38% saying that this was the reason they were resistant to change. This was 15 percentage points higher than gen X and 19 percentage points higher than both gen Y and gen Z.

  Albertans least trusting of online-only banks

  Almost as many Albertans cite the ability to talk with someone in person (30%) as the reason they haven’t made the switch to an online-only service as there were those who don’t trust online-only banks (29%). This is similar to those in Quebec where 18% value the ability to talk to a person and 17% say they don’t trust digital-only banks. And over in New Brunswick and Nova Scotia, there are more people who are distrustful of branchless banks (New Brunswick 26% and Nova Scotia 28%) than there are those that would prefer to talk with someone in person (New Brunswick and Nova Scotia 21%).

  Methodology

  Finder commissioned Pureprofie to survey a nationally representative sample of 2013 Canadian adults in October 2019.

Image: Getty