Use of online banking has increased slightly over a three-year period ending in 2019, while use of paper checks declined over the same time, according to study results released by the Federal Reserve Monday.
However, customers and members of banks and credit unions continued to use the physical branches of their institutions, despite their use of online services.
In its triannual Survey of Consumer Finances (SCF), the Federal Reserve said it found that just under 80% of families responding to the survey participated in online banking services at their financial institution; that’s up from just more than 70% three years before (in 2016).
However, even though families said they are using online banking, they also said they continue to use some physical financial services, such as visiting local bank branches, which did not differ much from those who said they did not. According to the survey, 79% of online banking customers said they visited their checking account branch – and 67% visited their savings account branch.
Among non-online banking services users, 85% said they visited their main checking account branch and 81% visited their savings account branch.
“Online banking appears to be an imperfect substitute for at least some physical financial services, including visiting a local bank branch,” the Fed report stated.
The report also indicates that financial services consumers continue to use paper checks, although at a lesser rate than they used to. In 2016, the report indicates, just more than 70% reported writing a paper check in the past 12 months. By 2019, about 65% were saying the same thing.
In another aspect of the report, the Fed said that the Internet has become “an increasingly important source of information over time” for families shopping for financial services. (Families with higher income tend to shop for financial services, while those in lower income brackets tend not to shop as much, the report indicates.)
“For information on borrowing, 55% of families reported using the Internet in 2019, up 14 percentage points from 2010 and up 34 percentage points since 2001,” the report stated. “Similarly, for information on investing, 45% of families reported using the Internet, up 12 percentage points from 2010 and up 30 percentage points from 2001.”
Suffering from the increased attention to the Internet for information on borrowing or investing was other forms of advertisements and media, which the report stated shoppers has become less reliant on. The Fed report said that is a continuation of a long-run trend that is “balancing out” increased Internet use. But shoppers continue to rely on personal contacts for their borrowing and investing intelligence.
“The use of friends, relatives, associates, and business professionals as sources has trended upward since 2001 for both borrowing and investing information, although it was roughly stable from 2016 to 2019,” the Fed noted.