Pandemic pushes US retail banking into digital era

Pandemic pushes US retail banking into digital era

I’m either blessed or cursed, depending on your perspective, to live a life across both sides of the Atlantic, with operating bases in California, Ireland, and Italy This gives me a rather in-my-face perspective on how the various regions operate and respond to global events. One of the most striking differences is, and sorry to say this, the archaic nature of the US retail banking system. Ask someone in Ireland if they’d like to be paid by check and they’ll look at you like you just asked if they’d like their pint out of a can or from the tap.

It really is astounding that a nation known for its tech hubs has payment processes that have remained unchanged for decades. As with many other things digital, the pandemic accelerated the shift towards electronic banking.

By May, more than 45% of Americans had changed the way they dealt with their bank, a survey of 1,000 people by consultancy FIS found.

According to an article in the Financial Times (referenced below), Well Fargo (WFC) has seen a 35% increase in the number of checks deposited digitally and a more than 50% increase in online wire transactions. The push to get clients to do more digitally is driven in no small part by its promise to investors that it will cut $10 billion in costs.

Bank of America, the country’s second-biggest bank by assets, after Wells Fargo, reports that nearly 40% of the clients’ checks are deposited online. Digital sales of mortgages have accounted for about 60% of the activity in 2020. The bank’s AI chatbot is handling about 400,000 interactions per day now, twice the level a year ago.

As retail banking consumers become increasingly comfortable with digital banking services the need for robust digital infrastructure only becomes greater. Yet another visible tailwind to Tematica’s Digital Infrastructure theme.

Source: Covid nudges US bank customers into digital era | Financial Times