The surge in digital banking
may not persist for all banks






The surge in digital banking
may not persist for all banks




The Coronavirus lockdown has strongly boosted digital adoption. But there is no room for complacency

Recent articles analyzing the impact of the Coronavirus crisis claim that there is no going back from all things digital.

And it is of course not surprising that the use of digital channels from communications to entertainment to e-commerce has increased multifold. Banks too say lockdown conditions have prompted a change in consumer behavior.

The question is, with the easing of lockdown conditions, will this digital uptake persist and grow? Or will cash and card take back its reign?

The answer depends on whether banks act quickly enough to capitalize on this surge in interest. Research suggests that not acting fast enough can actually produce the opposite effect, ie customers become more dissatisfied with digital banking services over the medium term. 

Changing banking behaviour

Before the crisis, digital banking had made good inroads, but with some worrying undertones. In Asia, according to a 2018 McKinsey study, digital banking already accounted for around 80% of monthly transactions.

However, these were mainly in routine banking activities such as checking balances and bill payments. A “significant” percentage of customers still preferred branch visits for transactions they considered complex.

These customers were also not necessarily happy with their banks’ digital channels.  Only around 45% marked their satisfaction level at 6 or 7 on a 7-point satisfaction scale. And in Developed Asia, where digital penetration is highest, only around 40% of customers would recommend their bank to a friend or colleague.



However, the imposition of lockdown conditions seems to be causing customers to rethink their relationship with digital banking. A J.D. Power survey conducted at the start of the crisis found that one third of retail banking customers planned to increase their use of online and mobile banking services post Covid-19.

This is already being borne out in reality. Singapore’s DBS Bank announced last week that digital transactions had nearly doubled in 1Q 2020, compared to the same period last year. The increase was driven by 100,000+ digital first-timers, of which 30% were aged 50 and above.

But banks are not benefitting uniformly from the crisis. According to J.D. Power, the primary beneficiaries are the largest banks with the most digital transformations underway. This is because these banks have the largest percentage of highly-engaged digital customers.

Transition To Digital

Like J.D. Power, McKinsey’s research has found that that the frequency of customers’ digital usage has a significant impact on satisfaction levels. However, this correlation is not linear. Customers who don’t use digital services at all, or conversely, use them very frequently, (ie more than once a week) tend to be the most satisfied. Those who use digital services but only infrequently (ie less than once a month) tend to be the least satisfied.

McKinsey believes this phenomenon stems from the digital adoption learning curve, and that banks need to take action to “skip the dip” by smoothening customers’ transition to digital.

This strategy will be even more relevant for users “forced” into digital banking due to lockdown restrictions rather than by choice. For this shift to become the norm, it is imperative that banks create compelling digital journeys that:

  • are instinctive
  • require minimum manual data entry
  • produce near-instant results
  • embed real time customer support
  • address lifestyle needs, not just financial needs

The Coronavirus crisis has opened doors to digital banking. But past studies suggest that only those banks able to reduce user friction and encourage strong engagement will be able to consolidate their gains.