Skip to content

Bank Earning Reports Spotlight Progress in Digital Payment Adoption

  • More and more banks report growth in use of digital banking channels
  • These developments align with growing consumer preference for financial transactions via digital channels
  • Some banks find it hard to innovate quickly reports that the observed shift toward digital channels in financial services shows no signs of slowing down as reflected in latest earnings results from incumbent banks and financial services providers.

During the first quarter, Bank of America logged a staggering 3.4 billion digital logins, with digital sales accounting for half of its total sales, as outlined in its earnings supplementals on Tuesday (April 16).

Additionally, the bank reported a significant uptick in digital households, reaching 748,000 in the quarter, representing 86% of its installed base. This marked an increase from 717,000 households and 84% penetration in the previous year.


A Fast Transformation - For Some

Bank after bank reported a climb in digital transactions:

Truist Financial Corp. mirrored this trend in its latest earnings report released on Monday (April 22). Digital transactions surged by 13%, totaling 76 million, while mobile app users increased by 8% to 4.9 million year-over-year.

Synchrony Financial also echoed the digital trend in its latest earnings results released on Wednesday (April 24). The online bank highlighted a 3% increase in digital transaction volume driven by heightened customer engagement and a rise in active accounts.

Of course, despite a genuine desire to adopt digital channels and transactions, not all banks are able to make the transition quickly.

James Butland, vice president of payments and U.K. managing director at Mangopay, discussed this growing trend in a recent interview with PYMNTS, emphasizing the challenges faced by traditional banks due to their legacy infrastructure and technology.

“The challenge that a traditional bank has, is that they sit on 150, 200 years of legacy infrastructure and probably 60 years of legacy technology. So, banks have found it difficult to innovate quickly,” Butland said. He noted, however, that change is ongoing as “banks are starting to realize the speed at which technology has changed the world.”

Shift Towards Digital Requires Innovation to Legacy Payments

As noted, by Mr. Butler, while the demand for digital has increased, many banks have not been able to keep up in updating their infrastructure and, maybe more importantly, their technology.

What is crucial to understand is that there are many layers that need to be considered. First, acceptance of newer payment channels such as P2P, FedNow, etc. Bank legacy infrastructure and core systems were simply not developed for these. This is why banks need to upgrade to the latest systems that will enable them to accept these new payment channels.

digital payments cropped smaller

Secondly, banks need to consider that, while there is a portion of their consumer base utilizing the latest payment channels, there is still a sizable portion that prefers the traditional payment channels -- such as checks. Unfortunately, it's impractical to not accept checks as it would alienate a large part of their customer base. So, banks need to leverage the latest innovation for legacy payment channels, including AI and machine learning. This enables banks to automate check processing and, more importantly, streamline processing and integrate with the latest core platforms.

Leave a Comment