UK banking apps overtake branches as consumers’ top priority

By Gloria Methri

Banking apps now hold greater importance for UK consumers than physical branches, according to new research by FICO. As many as 75% of customers rank a good mobile app as the most or second most critical factor when choosing their primary bank. In contrast, only 33% consider having a local branch as their top priority. The findings highlight a significant shift in banking preferences despite the ongoing debate surrounding branch closures.

The 2024 FICO Bank Customer Experience Survey underscores the growing dominance of digital banking while reaffirming the importance of human interaction in financial services. With 81.5% of consumers still banking with traditional institutions rather than digital-only challengers (12%), the challenge for banks lies in balancing technological advancements with personalised customer service.

Younger Consumers Drive Digital Banking Growth

The demand for high-quality banking apps is especially pronounced among younger generations. Over half of respondents in the three youngest demographic groups identified app quality as their top priority, compared to 37% of those aged 55-64 and just 24% of those over 65. This generational divide suggests that banks must continue investing in their digital offerings to attract and retain younger customers.

Despite the shift towards digital banking, customers still expect access to human support. A striking 80% of respondents emphasised the importance of speaking to real people, with older demographics placing even greater value on human contact. While 51% of those aged 18-24 rated human support a perfect 5 out of 5 in importance, this figure rose to 60% among those over 65.

Customer Service Remains Key Amid Digital Shift

Customer service remains a critical differentiator, with 64% of survey participants considering it equally important as banking products and services and 22% rating it as even more crucial. However, chatbots and automated services have yet to gain widespread consumer trust, with only 35% of respondents deeming them essential. Banks will need to refine their AI-powered interactions to bridge this gap while maintaining seamless transitions from automated to human support.

Preferred Communication Channels Vary by Purpose

The survey also revealed distinct preferences in banking communications. Consumers favour mobile text alerts for fraud warnings, ID verification, and debt-related notifications, while email is the preferred channel for marketing messages, account updates, and terms and conditions changes. Calls to landlines emerged as the least popular form of contact across all categories.

Mark Whale, a financial services partner at FICO, commented on the findings, “Although banking apps have become more important to British customers, it is vital that banks recognise that they can’t rely on them entirely. A strategic balance between apps and human interactions is critical. Used intelligently, AI can prove invaluable in creating better customer interactions as customers move across to apps.”

As digital banking continues to evolve, UK banks must ensure they are not just investing in cutting-edge technology but also maintaining the human touch that customers still value. The challenge ahead lies in integrating AI-driven efficiencies while preserving high-quality customer experiences to build lasting relationships in an increasingly digital landscape.