Nearly 1 in 3 Aussies formed new banking relationship during the pandemic: FIS study

Nearly 1 in 3 Australians have entered a new banking relationship with a financial institution or non-bank service provider during the COVID-19 pandemic, according to a new report released from financial technology leader FIS. The FIS PACE Pulse Survey examines how Australians have altered the way they shop, bank and pay in response to the pandemic.

Digital transactions have accelerated, with Australians shifting from in-branch transactions to online or mobile banking. This is likely to be a lasting shift, as only 7% of respondents indicate they are gradually returning to their “old ways” of banking. Australians are also rapidly migrating towards digital payments – QR codes being the most popular. 36% have increased their usage of QR codes when shopping in-store, while 31% are using cash less often now. Additionally, access to real-time/faster payments ranked as the most pressing need across generations.

The FIS report found that younger generations were often the quickest to make changes. 52% of Gen Zs and 63% of young millennials started a new banking relationship in the past 12 months, while just 2% and 4% respectively said they are returning to conducting transactions in branches. Led by young millennials, the younger generations are also using mobile payment apps more often. Nearly 9 in 10 (89%) young millennials own a mobile wallet, and amongst these 99% have used it in the past 30 days.

“Australian consumers have responded to the pandemic by seeking better banking experiences and are now prioritizing digital. As competition in the banking sector intensifies – with new tech-savvy entrants winning market share and consumers quick to enter into new banking relationships – it is absolutely critical for banks to offer a compelling customer experience from the get-go,” said Adrian Toynton, Banking Solutions at FIS. “To retain and win new customers, banks must modernize their platforms and harness advanced technologies, including cloud and API-enabled banking, to provide a seamless, always-on experience. Banks should also keep finger on the pulse of the habits and preferences of Gen Zs and young millennials, who are undoubtedly a crucial demographic that will determine what next-gen banking looks like moving forward.”

Key banking trends:

• 30% of Australians started new banking relationships in the last 12 months.
• Gen Zs (52%) and young millennials (63%) were most likely to start new banking relationships, compared to just 11% of boomers.
• Only a small fraction (5%) of respondents transitioned from unbanked to banked, with newly banked consumers skewing heavily toward Gen Zs and young millennials.
• One-quarter (25%) of respondents cited other key motivators. The desire for better benefits (31%) was the primary driver for entering a new banking relationship, followed by ‘starting a new chapter in life’ (29%) and accessing products or services that other banks didn’t offer (25%).
• 43% stated they will continue to use online/mobile banking post-pandemic, moving away from in-branch transactions.
• 7% indicate they are gradually returning to their old ways of banking. Of all generations, baby boomers (13%) are the most likely to return to conducting transactions in branches, and Gen Z (2%) and young millennials (4%) are the least likely.

Key payment trends:

• 36% of respondents have increased their usage of QR codes and 24% have increased their use of tap-and-pay (contactless) when shopping in store.
• 31% said they are using cash less often now.
• 89% of young millennials own a mobile wallet, versus 35% of boomers. Amongst the young millennials who own one, 99% have used it in the past 30 days.
• Access to real-time/faster payments ranked as the most pressing need across generations.
• Young millennials are most in need of access to real-time payments immediately (16%) or within six months (28%).

Additionally, the FIS report provides insights into the financial health and financial attitudes of Australians following the pandemic. The top personal financial goals amongst the younger generations suggest a desire to rein in spending and start saving in the aftermath of the pandemic. Key findings are as follows:

• Young millennials cite building an emergency fund (26%) as their top goal, following by setting a budget and sticking with it (24%).
• Saving for a house tops the list for Gen Z (31%), followed by building an emergency fund (27%).
• One-quarter of Australians were found to have suffered a job setback in the past six months, with young millennials and Gen Zs being most vulnerable.
• 4 in 10 young millennials suffered a job setback, most often a pay cut (14%), temporary lay-off/furlough (11%) or deferred promotion (12%).
• 36% of Gen Zs had a job setback and were more likely than other generations to experience a pay cut (22%) or a permanent job loss (11%).
• Nearly two-thirds (65%) of young millennials said they wouldn’t be able to sustain themselves longer than a month after a pay cut. 58% of Gen Zs indicated the same.
• On the other hand, 39% of boomers said they could financially survive more than one year.

To download the complete copy of the report, including the methodology, please visit http://fisglobal.com/paceaustralia