Six ways that online banks are changing what customers expect from banking

The rise of challenger banks and the availability of digital tools have drastically changed the world of banking and personal finance - and, with them, what consumers expect from banking.

But, while there are over 250 global “neobanks” to choose from, only an estimated 5% of them meet their customers’ expectations and manage to break even.

So, how can today’s digital only banks stay relevant in such a fast-changing landscape? Here are the new priorities for users looking to choose their next bank.

Early paychecks are becoming a more common feature

The rising inflation and the financial scars left behind by the pandemic related crisis have affected most households. So, it isn’t surprising that nearly 65% of Americans and a third of Brits today live paycheck to paycheck.

To help households keep up with their bills and financial goals, online banks like SoFi have started to offer early direct deposits from employers, so that users can receive their monthly salary up to two days before it’s due.

Since bills and monthly payments often come around at the same time as salary payments (i.e.: the last day of the month), receiving funds just a few days in advance can help households better manage their finances and make more conscious decisions - such as transferring a percentage of their monthly income into their savings account.

Users rely on 24/7, real-time digital customer service tools

Today, challenger banks in the US serve nearly 40 million users, while, in the UK, over 25% of people are now switching towards digital only banks.

Such a mass shift towards online banks has only been possible thanks to digital customer service tools, which reduce the need for physical branches and provide 24/7, real-time assistance.

As cash transactions are declining at a vertiginous rate, consumers are looking for digital banks that offer tools like live chats, education resources (knowledge base), and social media interaction.

Data safety and cybersecurity are more important than ever

While mobile and online banking tools are constantly improving, managing the associated technology risk and cybersecurity remains one of the leading challenges in the industry. On the other hand, for consumers, it has never been more important to know that their money, data, information, and investments are safe.

Data encryption, multi-factor authentication procedures, malware protection, safe their-party services, and emergency assistance are just a few of the important safety features customers expect today.

Budgeting and money management features are a given

As the cost of living continues to rise and more households struggle to keep up with their saving goals, money management apps have never been more popular.

But not all of these budget-tracking apps are created equal, and safety standards can vary significantly from one tool to another.

What’s more, budgeting apps are not subjected to the strict regulations banks need to abide by. That’s why users value always more proprietary and internal budgeting features they can trust.

Consumers expect user-friendly mobile applications and web banking portals

Consumers - both private users and commercial organisations - expect advanced API features that allow for safe, immediate, and low-cost transactions. That’s why it isn’t surprising that Open Banking is being adopted at an unprecedented rate and already impacting retailers and consumers.

But users are also after banking websites and mobile applications that are highly user-friendly, easy to navigate, and intuitive. This means that banks need to find and maintain a delicate balance between offering a streamlined interface and making a wide range of powerful features available.

Users are still loyal – but to more than one bank

For consumers, it has never been more important to find an online bank they can trust. And, for banks, gaining and retaining their customers’ loyalty is crucial to success - especially in today’s competitive environment.

But, while users might still partner with a banking provider in the long term, they are no longer loyal to a single bank.

After all, also thanks to the high accessibility of online banks, consumers no longer need to choose between one account and another - they can easily partner with more than one bank and use the strengths of each to their advantage.