Nearly half the country’s population is now content in completing almost all of their banking needs via the internet. The percentage (roughly 46%) is a staggering number, but if one were to only count the millennials, it would be a lot more impressive. A huge majority of that 46% consists of millennials and that makes sense since they are the most aware and financially active segment of the population. A closer look at the reasons responsible for driving people to online banking makes it clear that this is a trend that is not going to go away any time soon.
Double the Standard Interest Rates
In the United States, the average rate of interest (APY) offered by traditional banks is just 0.06% – 0.08% for savings accounts, which almost seems great when compared to other financial institutions who pay out at interest rates as low as 0.01%. On the other hand, Ally Online Bank pays their savings to account holders an interest rate of 1.90%, which is more than double the standard rate offered by any brick and mortar bank in the country. Being an online-only bank, Ally is able to save a huge portion of the costs which all traditional banks have to bear in order to maintain their physical branches. The savings are then reflected in the returns they provide to their customers.
Studies clearly indicate that millennials spend a lot of time on their phones and therefore when they have the opportunity to shift all their banking needs to that same device, it is only natural for them to make the change. An astounding 82% of the 18-24yearold US citizens were found to be using their smartphones as the primary device for fulfilling all their banking needs. In total, 60% of the nation’s population bank via their smartphone apps and browsers, although not exclusively yet.
The Green Initiative
Every business leaves a carbon footprint, but the aim is to reduce the size of the damage they do by as much as possible and that’s where digital banks win hands down. The complete absence of physical branches just makes them a greener business by default. The fact that the money saved from going paperless and branchless is distributed back to the account holders in the form of twice the normal interest rate is just a huge added bonus that makes the shift from offline to online banking so much easier for millennials and just about any segment of the population that understands it.
As is evident from the reasons and the current situation, online banking just makes more sense at the moment and it is not that surprising to see a large section of the population and a huge majority of the millennials shifting their money and banking needs to online-only banks. Banks like Ally Online provide better interest rates, make banking extremely convenient, don’t have a minimum balance requirement and they even contribute towards saving the environment by leaving a minimal carbon footprint.