More Aussies swapping bank branches for mobile banking

When was the last time you went into a bank branch to make a transaction? The odds are much better that your last bank transaction was made on a mobile device, according to new research from Roy Morgan.

According to the Roy Morgan Single Source Survey, over an average four-week period in the six months to October 2018, there were 4.73 million people using bank branches – a decline of 1.77 million or 27.2% from the 6.50 million recorded in 2014.

Over this same period, use of mobile banking over an average four-week period has increased by 3.51 million or 62.2%.

While internet banking on a website remains the most popular means of doing business with a bank, it has declined since 2014 and may be surpassed by mobile banking in a year or two, according to Roy Morgan. Phone banking was also found to be declining in popularity.

Major banking channels used in the last four weeks

Banking channel 6 months to October 2014 6 months to October 2018
Internet banking using website 52.3% 47.1%
Internet banking using an app on a mobile phone or tablet 29.3% 44.7%
Visited a branch of a bank or other financial institution 33.7% 23.1%
Phone banking 16.1% 13.6%

So, according to Roy Morgan, who’s killing bank branches? You guessed it – millennials.

The Roy Morgan survey found that nearly two-thirds (63.4%) of millennials use mobile banking, making up over one third (36.4%) of the total mobile banking market. Generation Z and Generation X were also found to make up 26.3% and 24.6% of the mobile banking market respectively.  

The older generations were the only ones found to prefer bank branches over mobile banking, with 38.1% of pre-boomers and 29.8% of baby boomers using them over an average four-week period.

Branch Banking and Mobile Banking – Generational Comparison

Generation Branch used in last 4 weeks Mobile banking used in last 4 weeks
Pre-boomers (born pre-1946) 38.1% 6.2%
Baby boomers (born 1946-1960) 29.8% 25.0%
Generation X (born 1961-1975) 23.5% 48.5%
Millennials (born 1976-1990) 19.8% 63.4%
Generation Z (born 1991-2005) 13.9% 53.6%

Roy Morgan’s research also found that the higher your household income, the more likely you are to prefer mobile banking. To illustrate, mobile banking preference goes from 63.4% among those with household incomes of $150k p.a. and over, to 25.3% among those with household incomes of less than $40k p.a.

Even though mobile banking was found to be more popular among higher-income households, branches were found to still be in use by around 23% of those in households with incomes of $60k or more.

Branch Banking and Mobile Banking – Household Income Comparison

Income Branch used in last 4 weeks Mobile banking used in last 4 weeks
<$40k 30.5% 25.3%
$40k – <$60k 27.4% 39.2%
$60k – <$100k 25.8% 51.5%
$100k – <$150k 22.6% 59.5%
$150k+ 20.9% 63.4%
Total 23.1% 44.7%

Roy Morgan industry communications director, Norman Morris, attributed the growing popularity of mobile banking to its high level of customer satisfaction, with 89.2% compared to 85.7% for bank branches and 77.4% for mobile banks.

Another factor he credited was rapid technological change:

“The strong preference for mobile banking by millennials is a result of them having grown up with technology, compared to the older generations who have been brought up only using branches. As millennials get older however, their financial needs are likely to become more complex and so they may also require some type of personal contact, possibly involving a branch.”

“The idea that with increased complexity and incomes that there is still likely to be a role retained for branches is shown by the fact their use remains fairly consistent for all those with household incomes over $60k pa, despite their increased use of mobile banking.”

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