Even amid the coronavirus pandemic, some banks continue to be resistant to digital adoption.
A second-quarter survey by Promontory Interfinancial Network, an Arlington, Virginia-based provider of FDIC-insured deposit placement services, found that 40% of U.S. banks were expanding their digital offerings as a result of the COVID-19 crisis. That means 60% were sticking with the status quo. Digital services refer to a bank’s website or mobile apps, or a combination of the two.
Almost half of those surveyed (48%) indicated their bank was leaning on reopening branches to the public with limits on in-person activities, while 38% said they were focusing on reopening branches with no limits. Meanwhile, 88% of bankers said a safe, effective COVID-19 vaccine was not a condition for their bank to return to pre-pandemic operations.
“Nearly six months since the virus first started spreading in the U.S., bankers are still trying to grapple with its impact on their customers and business,” Mark Jacobsen, co-founder and CEO of Promontory Interfinancial Network, said in a news release.
Drilling down into the results about digital banking, 40% of banks with less than $1 billion in assets said they were boosting these services. The figure was 37% for banks with $1 billion to $10 billion in assets. Geographically, the number was 44% for banks in the South, 40% for banks in the Midwest, 39% for banks in the West and 32% in the Northeast.
The survey also shows that some banks are cutting back on tech spending in response to the pandemic-triggered recession. Fifteen percent of those surveyed said their banks were delaying tech investments, while 28% were putting off the development or rollout of new products and services.
It is also important to note that Promontory asked those surveyed about whether or not they were considering “increasing investment in technology” despite a recession. Promontory included that response in the “Other” category and apparently, a mere 1% of those surveyed said they were increasing investment in technology despite a recession.
Among banks with less than $1 billion in assets, 14% reported postponing tech investments and 28% reported delaying the development or rollout of new products and services. For banks with $1 billion to $10 billion in assets, those figures were 18% and 26%, respectively.
Here’s the breakdown by region:
- Northeast: 18% (tech) and 29% (products and services)
- South: 17% (tech) and 23% (products and services)
- Midwest: 14% (tech) and 29% (products and services)
- West: 8% (tech) and 34% (products and services)
Promontory Interfinancial Network conducted its online survey July 1 to July 15. Across the country, CEOs, presidents and chief financial officers from 557 banks responded.
Despite the survey findings, digital banking continues to gather steam among consumers. Before the pandemic, a survey by McKinsey & Co. found 60 percent of U.S. customers under age 70 had embraced digital banking tools in 2019. Advancing this trend, Google recently added six banks to its new U.S. platform for Google Pay digital checking and savings accounts.
“Banking has changed irrevocably as a result of the pandemic. The pivot to digital has been supercharged,” Jane Fraser, CEO of Citibank, told Forbes. “We believe we have the model of the future — a light branch footprint, seamless digital capabilities and a network of partners that expand our reach to hundreds of millions of customers.”