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Banks Commit to Digital Transformation Plans as Investment More Than Doubles

May 17, 2023

Banks Commit to Digital Transformation Plans as Investment More Than Doubles

Mid-size banks and credit unions more than doubled their investments in digital transformation from 2021 to 2022, digital banking solution provider Alkami has revealed. 

In its ‘2023 Digital Banking Performance Metrics‘ research report from Cornerstone Advisors, Alkami explains that mid-sized banks doubled investment in digital transformation to $425,000 per $1billion in assets, up from an average of just over $200,000 per $1billion in assets.

Alkami also found that account holders are increasing their usage of key digital banking options. Mobile deposit popularity has increased, with 52 per cent of active digital banking users depositing checks via mobile devices in 2022: a 15 per cent rise from the previous year.

Similarly, loan applications also saw significant digital banking growth, with 47 per cent of all loan applications in 2022 coming via digital channels: an 11 per cent rise from up from 2021. Peer-to-Peer (P2P) payments are seeing increased adoption with active P2P payment users as a percentage of digital banking users doubling from 12 per cent to 25 per cent in 2022.

The research report also reveals the fragmentation of mobile payments. Seventy per cent of account holders are using more than one provider. Forty-nine per cent are also using three or more. Three out of four Gen Z and Millennial consumers are also using PayPal.

Overall, 69 per cent of checking account holders are now active digital banking users, up from 67 per cent in 2021. Meanwhile, an average 56 per cent of checking account holders at surveyed institutions actively accessed mobile banking options in 2022.

FI’s using social media

Around a third of the participating financial institutions shared social media-related metrics in the 2022 report. Around 85 per cent reported data for Facebook and LinkedIn and 60 per cent reported data for Twitter.

The report cites the “turbulence” surrounding the acquisition of Twitter, and the decline in the number of Twitter users and activity of those still on the platform, for banks and credit unions reported that the percentage of customers or members following them on Twitter dropped year over year by about half.

However, it emerged that financial institutions’ Facebook followers grew significantly for all reporting institutions.

‘Improved digital banking performance likely improves overall business performance’

Ron Shevlin, chief research officer at Cornerstone, discussed the findings: “The banks and credit unions in this report with the best overall financial performance consistently outperform their peer financial institutions on a wide range of digital banking metrics. The correlation is strong enough to suggest that institutions with improved digital banking performance are likely to improve overall business performance.”

The research shows the highest-performing financial institutions, accounting for 22 per cent of the financial institutions surveyed, are those most aggressively investing in emerging technologies.

Allison Cerra, chief marketing officer at Alkami, said: “Cornerstone’s research indicates that banks and credit unions are most likely to succeed with digital banking initiatives when they provide users with a feature-rich, user-friendly digital banking experience and foster a culture where these initiatives are linked to business objectives”.

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