Easy Money: Online banking shift from shutdown is now ‘permanent’
Online banking has been growing for years, but local bankers say the coronavirus pandemic has turbocharged the trend.
They’ve seen customers rapidly moving to a variety of digital banking applications, including online check depositing, electronic signatures for loan documents and digital wallets, which store credit and debit card information on a smartphone payment app.
“It’s clear that consumer behavior has shifted toward digital channels and we believe that the shift is permanent,” said Norm Plumstead, president and chief executive officer of Honor Bank.
Digital banking has taken off in recent months because consumers had few other options for conducting their financial business. Bank offices – where customers could deposit checks, apply for loans and conduct other transactions – were ordered closed because of the pandemic and have only recently reopened.
Banks have seen a rapid shift in the use of digital banking services even among older people who formerly had shied away from the digital revolution. In August, the percentage of American seniors using online or mobile banking was as high as 80%, according to Deposit Accounts, a bank account comparison service.
Dave Shooltz, market president of Fifth Third Bank, said 75% of all the bank’s transactions go through digital channels. That’s up from 60% prior to the pandemic.
“The pandemic forced those who may have been reluctant to try our digital services like scanning a check for deposit, (monitoring) checking account activity and transferring funds,” he said.
Banks moved quickly to prepare business and individual customers for a broader use of digital services as the pandemic took hold in March.
“Many of our teams in retail, lending and treasury management called our customers very early on in the stay at home order to discuss our electronic capabilities and offer alternative ways for them to manage their finances,” said Mary Mrozinski, senior vice president of digital services and customer experience innovation at Ludington-based West Shore Bank. The bank has two offices in Traverse City.
West Shore Bank also decided to go through with an upgrade to its online bank system, begun before the pandemic, and took it live in May.
The upgrade offered some new online services, such as a secure chat feature that provides immediate responses to customers’ questions and provides a safe way to electronically exchange documents.
The rapid shift to digital banking has also increased concerns about cybersecurity. Bankers say they are regularly upgrading security measures to keep customer accounts safe.
But security worries, which have accelerated during the pandemic, also have provided banks with the opportunity to sell customers enhanced safety features for their accounts.
“There is more and more concern” about cybersecurity, said Tom Ranville, market president of Independent Bank. As a result, consumers are more willing to pay for premium products, such as Independent Bank’s “Positive Pay,” which alerts business customers of potentially fraudulent checks drawn on their accounts.
West Shore Bank has upgraded security features for its debit and credit cards. The new functions, among other things, allow customers to turn cards on and off, set spending limits and restrict purchases at certain types of stores and merchants.
Todd Gignilliat, vice president of First National Bank of America, said his bank has allowed customers to open deposit accounts online since June 2017. But interest in that feature as boomed since the start of the pandemic as more than $30 million in new online accounts were opened in the first half of this year.
“We recently invested in a new platform for opening accounts online that offers a very fast account opening process for our customers,” Gignilliat said. “The average customer can open a new account online in less than three minutes.”
PNC Bank has “strongly recommended” its customers utilize mobile, online and voice banking services during the pandemic, said Marcey Zwiebel, director of PNC’s corporate public relations.
Seventy-three percent of non-business customers used non-teller channels for the majority of their transactions in the second quarter of this year, up from 69% a year ago, she said. Deposits through ATMs and mobile channels rose to 65% in the second quarter, up from 56% in second quarter last year.
Will customers ever return to bank branches to conduct financial business? Bankers say many will, particularly business customers and high-net-worth individuals with complex financial issues.
“Community banking is, and always will be, about relationships,” said Plumstead of Honor Bank. “Therefore, no matter how we deliver our services, we will do so with humanity and a personal touch.”
Shooltz of Fifth Third agrees.
“Will we go back to face-to-face meetings? Absolutely, where we need to do that, we will,” he said. “But it has been nice to be able to become comfortable with all the ways we can interact with our customers.”