A Cashless Online Banking World?

Research Strategy Group international recently used our prediction market platform to ask a sample of Americans some questions about banking and payments.  Probabilities for a number of outcomes were forecast. The resulting crowd predictions were closely aligned with other published research in the area. Results for three of the questions are discussed below.

First of all, our “crowd” of forecasters were asked if they thought the majority of U.S. consumers over 50 would be using online and mobile apps to conduct basic banking in 2019. A 68% probability was assigned to this possible outcome. In the qualitative comments for the study, we see that there is a level of resistance to adoption of online banking. Many older individuals are comfortable banking the way they always have. There is also a level of concern about the possible difficulties in learning how to use online banking apps, and fears they may not be as safe and secure as the tried and true check book and band teller approach to banking.  Recent published research indicates that while the rate of adoption for older individuals is significant, penetration is still at or just below the 50% level. Usage of online banking apps remains strongly skewed towards millennials and younger people generally, with almost 8 in 10 using online banking apps.

We also asked the crowd what the probability was that the market share of traditional brick and mortar banks would decline in the next two years as a result of online banks such as Ally and Synchrony. The probability was 65% that this would come to pass. Many developments are at play related to this question. While it is true that many major banks have been closing branches, many of these closures are of smaller underperforming branches. Large and small banks alike are also opening significant numbers of new branches that are more strategically located and focused on the services that customers continue to want or need to have delivered in person. The traditional bricks and mortar bank is not so much ”dead” as it is being repurposed.  Likewise, although the “online” banks are capturing some share for certain types of services many are building out banking cafes or quasi-branches where their customers can interact with staff. Continued  desire for a human interface for things like opening new accounts and getting financial advice will likely slow the erosion of share for the traditional bricks and mortar channel.

Finally, we asked our predictors what was the probability that cash as a form of payment would largely disappear over the next few years. The predicted probability that this would come to pass was not particularly high at 46%. Cash is seen as easy, safe and convenient for many types of purchases. Despite the rapid growth of debit/credit payments and other payment platforms like Apple Pay and Google Pay, the U.S Federal Reserve reports that cash still accounts for 30% of all transactions and 55% of all transactions under $10. The Crowd confirms that cash is seen as more convenient for small purchases and that there are still significant residual concerns about the security of electronic payments. Fully one quarter of Americans pay for all their transactions in cash and the amount of currency in circulation is at record levels. It seems unlikely that we will make the transition to a cashless society anytime in the near future.

For more information on how you can use Crowd Intelligence to move your business forward, please contact Pam Harrison pamharrison@rsginc.net or Brian Cash briancash@rsginc.net