June 1, 2023

Stay Ahead of the Curve: 5 Must-Know Digital Banking Trends for Banks and Credit Unions

Today’s members don't just want a good banking experience—they want it all online, quick and easy, to match their tech-savvy lives.

In fact, it’s estimated that over 75% of member interactions with banks and credit unions now occur online. 

And the adoption of online banking among millennials and Gen Z is surging at an even faster pace.

But here's the thing: keeping up with this digital banking wave can be tricky. There are a ton of choices out there. That’s probably why only 40% of credit unions track analytics across the digital journey and even fewer use web analytics.

To help you stay ahead of the curve, or to start catching up, we've whipped up a list of five key digital banking trends you really need to know about, and we've even included some examples.

Ready to jump in? Let's take a look.

Trend #1: The Rise of Digital Banking and Its Impact on Member Experience

Banking has gone digital.

In fact, a whopping 78% of adults in the U.S. would rather do their banking online. That leaves just 22% of Americans who'd prefer to get off their couch, drive to the bank, and do their business in person. 

digital vs in person banking

So what does all of this mean for your bank or credit union?

It means that keeping your members happy isn't just about treating them like royalty when they walk into the branch. It's about making sure they can do everything they need to, from the comfort of their own homes. 

Trend #2: Using Technology to Engage Your Member Database 

A study by Callahan & Associates found that only 4.6% of members from a sample of 93 institutions with assets between $1 billion and $5 billion had their first mortgage with their credit union. 

This means that your member database is brimming with untapped potential, just waiting to be discovered, for both banks and credit unions alike. 

These individuals are already connected to you, making them easily accessible and more likely to engage in a conversation when it comes to their borrowing needs.

But just how big is this opportunity? 

Let's imagine a scenario where you increase the percentage of members obtaining their first mortgage with your institution by just a few percentage points. The impact of this seemingly small improvement has the potential to be substantial.

Not only will engaging your existing members result in increased revenue for your bank or credit union, but it also strengthens member loyalty and engagement. 

But how can you engage with clients who haven’t explored mortgage options yet?

This is where technology like Homebot can help. 

When you add your members who already own a home to Homebot, they’ll receive a monthly Homeowner Digest, containing highly personalized home finance insights like this:

homebot digest

The Digest is a personalized, digital report sent to homeowners each month, providing them with valuable insights and strategies for building wealth, all while featuring your loan officers as the expert to contact when their questions need answers.

Interested in taking the Homeowner Digest for a tour? Check out this interactive demo.

While making it easy for your members to track the value of their homes brings your customers substantial value, the Digest also features various options for leveraging their equity.

Picture this: You've got a young couple with three kids and a home they love. They have at least 35% equity in their home, and they snagged a sweet 3.5% interest rate back in 2019. They'd love a bit more space, but they don't want to leave their excellent school district. So, moving doesn't sound too appealing. 

Instead, they're thinking about adding an extra room through a renovation project. Now, when they open up their Homebot Digest, sent courtesy of your institution, they'll find personalized ideas on how to use that home equity they've built up.

ways to use home equity

If they're curious and click on the "add more livable space" option, they'll see an easy-to-understand breakdown of how it could play out.

add more living space

Conveniently, your clients can reach out to your loan officer by clicking on the pink buttons, to generate a new lead. You can expect to engage at least half of your member database each month, just like Willamette Valley Bank—you can read their story here.

Trend #3: The Rise of Mobile Banking in Lending

Mobile banking has completely changed how we handle money, and that includes mortgages.

In fact, check out how Bank of America's mobile app users ballooned from 12 million in 2012 to over 35.45 million in 2022. That's a whopping +191% increase!

bank of America mobile bank usage growth

Mobile banking offers a bunch of perks when it comes to lending. Let's break down some of the perks and major mobile banking trends. 

  • Convenience: One of the big wins with mobile banking is how easy it makes things. Your clients can handle their loans right from their couches. Apply for a loan, submit documents, check loan status, and manage mortgage payments - all from a device.
  • Reach: Mobile banking has become more accessible, especially in rural areas and places where banks are few and far between. Customers can apply for loans, check eligibility, and get loans no matter where they are.
  • Security: Banks have stepped up their security game. We're talking multi-factor authentication, encryption, and secure communication to keep personal and financial info safe.
  • Personal Touch: Mobile banking lets banks and lenders offer tailored services to their clients and members. They can analyze data and customize their loan options, interest rates, and repayment plans to fit their unique needs. 

Plus, there's a whole world of tools and apps in the mobile sphere that makes borrowing even easier:

homebot home search
  • Financial Health Monitoring Tools
  • Mortgage Calculators and Comparison Apps
  • Document Management Apps
  • Credit Score Tracking Apps

These tools will help your members make smart decisions, keep an eye on their financial health, simplify the home-buying process, and keep themselves organized.

And that's exactly why Homebot is going all in on mobile with our recent acquisition of Quo.

Trend #4: Nurturing Relationships By Leveraging Digital Banking for Non-Transactional Engagements

Banks are looking to level up their relationships with customers, stand out from the crowd, and make the banking experience more effective and simple. One way they're doing this is by focusing on non-transactional interactions in digital banking.

What's a non-transactional interaction, you ask? 

It's about going beyond the basics like transferring money or paying bills. It's about making a deeper, more meaningful connection with customers across the board.

Thanks to tech advances, banks are now offering personalized services that add value. Let's check out some examples of non-transactional interactions in digital banking:

Personalized Financial Advice: Banks can now analyze and optimize member spending patterns, saving habits, and financial goals to give them financial advice that's all about improving their day-to-day, all thanks to modern data analytics and AI.

Credit Monitoring Apps: When it comes to credit monitoring, banks are seriously stepping up their game. Nowadays, they're not just holding customers hard-earned cash and giving out loans, they're also providing clients with credit monitoring apps. These tools are helping when it comes to planning to buy a new car and eventually owning their future home, driving more business back to you.

For instance, with Bank of America’s credit monitoring app, clients can check their FICO® Score every month. The best part — it won't ding their credit score. They'll get to see the main factors affecting their score and areas where they can improve.

Bank of america credit monitoring

Virtual Financial Advisors and Chatbots: These digital helpers are popping up more and more in digital banking. They offer real-time support and can answer your financial questions, while guiding them to other financial products and services.

For instance, Bank of America has a chatbot named 'Erica' in their mobile banking app. Erica helps users manage their money by doing things like checking account balances, providing transaction history, scheduling bill payments, and giving personalized financial tips.

mobile banking chatbot - Erica

Financial Education and Resources: Many banks are giving customers access to educational content such as articles, videos, and webinars on financial topics, empowering customers to make informed decisions.

For instance, Bank First offers both live and previously recorded webinars, aspiring to lead the way as each client’s financial expert.

mobile banking access to resources and education

Gamification and Rewards: Banks are also using gamification to encourage good habits. They offer rewards, badges, or points to customers who hit certain milestones, like saving a specific amount or reducing their debt. This makes banking more fun and keeps customers around for the long run.

For instance, the PSECU Savings App offers members a fun way to save money by setting specific savings goals and adding money to a virtual piggy bank in their app.

gamification and rewards in mobile banking

Community Building: Banks are also using social media and digital platforms to create a sense of community online with their customers. They set up online forums, groups, and channels where customers can share financial tips, ask for advice, and connect with others who are in the same boat.

For example, Franklin Mint Federal Credit Union has a foundation that regularly hosts events, and supports both education and charitable causes within their communities.

community in banking

These examples show how banks are using technology to make non-transactional interactions better and provide digital experiences that are all about building relationships.

Trend #5: Millennials and Gen Z Shaping the Future of Digital Banking 

Millennials and Gen Z are becoming a key demographic for banks and credit unions to focus on in the digital banking scene.

This is because Millennials and Gen Z are what we call "digital natives". 

They've grown up with tech and are expert users. In fact, a whopping 79.3% of millennials expressed that they prefer banking digitally. 

Now, we're not saying to forget about other generations like baby boomers, but it's clear that the future of banking is in the digital realm, and it's the younger folks who are driving its future.

Here's why banks should be dialing in on millennials and Gen Z for digital banking:

  • Market size and potential growth: Millennials and Gen Z make up a significant chunk of the world's population. As they grow up, they become potential customers for banks. Offering digital banking services that fit their needs opens up a huge market with lots of room for growth.
  • Adaptation to new technology: Millennials and Gen Z are like fish in water when it comes to new tech. Studying these demographics helps banks stay on top of emerging trends and incorporate the latest solutions in digital banking.
  • Preference for online services: Millennials and Gen Z are all about convenience, speed, and user-friendly experiences. Banks that don't get on board with this could lose out to digital-first competitors.
  • Environmental consciousness: This group consists of ‘green thinkers’ who care about the environment. They're likely to prefer digital banking services that cut down on the need for physical branches, paper transactions, and other things that harm the environment.
  • Brand loyalty and advocacy: Millennials and Gen Z tend to stick to brands they know and trust. If banks and credit unions can provide great digital banking experiences, they can build loyalty with these customers.

By tuning into the needs and preferences of these younger generations, banks and CUs can tap into a massive market, drive innovation, and build lasting relationships with customers.

Final Thoughts on the Latest Digital Banking Trends

To wrap up, if you want your bank or credit union to keep up in this increasingly competitive, tech-heavy crazy financial world, then you’ve got to keep an eye on the latest trends, be open to new ideas, and always be ready to adapt to what your customers and members, especially the tech-savvy millennials and Gen Z, are looking for. 

Got an appetite for more? Dig into some related content below:

Book a demo to learn how Homebot can help your bank or credit union drive mortgage leads and nurture clients.

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