5 trends expected to redefine digital banking

Digital banking is ever evolving, but emerging shifts in behaviors and attitudes among consumers, merchants and issuers suggest we may be on the verge of the next big revolution.

A new research report from Ethoca looks at how consumers’ changing habits and preferences place new demands on the features and experiences offered by issuers and merchants—as well as how those businesses are preparing to address consumer demand and position themselves for the future. 

Here are five trends we see sparking the next wave in digital-banking innovation:

1. Consumers expect more—and are driving change.

Today’s consumers have high expectations for their digital banking experience, especially younger generations.

Millennials and Gen Z use their smartphones frequently to check their financial information, with 60% of millennials reporting they log into their accounts five or more times per week, according to a survey by Datos Insights.¹ As these generations comprise a growing share of the world’s population, we can assume their needs and preferences will drive consumer demand—and that digital-banking features and experiences will be pivotal to their choice of banks.

In fact, the same Datos Insights survey found that more than half of the most tech-savvy consumers said they would switch or consider switching banks for specific digital- and mobile-banking capabilities, such as managing subscriptions, at 61%, or managing product returns, at 58%. 

A different survey found that 75% of consumers won’t use digital-banking tools and features unless they’re intuitive and easy to use.²

2. Purchase transparency is becoming table stakes.

As e-commerce and digital subscriptions account for more purchases, consumers are demanding a more connected experience that provides greater insight and control over their purchases.

Consumers increasingly want transaction details—such as a clear merchant name and logo, location of purchase and itemized price breakdown—made available through their digital banking apps. And 73% of consumers have given their phone number or email to a merchant to receive a digital receipt.³

It’s becoming increasingly important to provide such transaction details through digital-banking apps—as they serve as a “single source of truth” for many consumers who don’t want to wade through their emails or text messages to find receipts.

Moreover, having that information within their banking app can increase purchase transparency and recollection when someone reviews their transaction history, reducing cardholder disputes of charges they don’t automatically recognize.

3. Merchants see the benefit of a more cohesive experience.

Likewise, merchants benefit by providing their customers with a more robust and transparent experience through the latest digital tools—and not just because customers expect it.

Providing digital receipts through banking apps, for example, can support customers in a channel they’re already engaging with, helping them recall transactions and reduce needless chargebacks that significantly hurt merchants’ bottom line.

Ninety-two percent of merchants say they offer digital receipts or plan to, while 66% of those surveyed said they already offer purchase details beyond the transaction date and amount, according to a Datos Insights merchant study.⁴  Eighty percent of merchants surveyed agreed that digital receipts help lower chargeback rates.⁵

Moreover, giving customers access to subscription controls that allow them to easily cancel or pause subscriptions can reduce the time and cost merchants spend managing related disputes. Fifty-six percent of merchants currently offer a subscription, while 44% said they’re considering offering them within the next couple of years.⁶

Customer subscription controls could save merchants significant money, as 94% of them currently have 30 or more employees managing subscription-related disputes, the Datos survey found.⁷

4. Issuers look to reduce disputes and call-center costs.

Beyond consumers wanting easy-to-use, self-service digital tools in their banking apps, issuers that offer them can also see a reduction in chargebacks and operational costs.

For example, features like digital receipts that allow customers to get information about their purchases—and more easily recall them—can reduce the number of cardholder calls or interactions with the issuer’s customer support center.

And the cost of providing self-service is generally far less—measured “in pennies”—than that of providing support from a live customer support agent, which can cost upwards of $10 per call, according to Harvard Business Review.⁸ Furthermore, many studies have found that the cost of retaining customers is less than acquiring new ones.

5. Technology and data-fueled partnerships are creating a more connected ecosystem.

Merchants and issuers increasingly see value in partnering with technology providers like Ethoca that offer the integrations and collaboration they need—leading to a more connected, seamless experience for their customers.

These collaborative tools reduce the complexity by securely sharing data and providing customers with the insight and transparency that will provide for a rewarding digital experience–today and in the future.

And embracing new technologies doesn’t have to be difficult. The right technology partners can support implementing the infrastructure by providing APIs and web-based portals that make implementation and usage simple.

Want to gain a competitive edge with next-generation tools and learn more about the digital-banking trends shaping the future? Download the full report.

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