How The Pandemic Has Accelerated The Adoption of Online and Mobile Banking


The banking industry saw a significant shift toward digital banking in 2020. All signs pointed to consumers moving in that direction already, and online and mobile banking have grown increasingly more popular in the past decade. Amid a global pandemic, however, individuals and businesses faced never-before-seen challenges that required a change in how they bank.

We spoke to Axos Bank President and CEO Greg Garrabrants to get an insider’s view of this accelerating trend toward digital banking.

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The move to online and mobile banking

Online banks have long captured consumers’ attention by offering significantly higher interest rates on deposit accounts than their brick-and-mortar counterparts. Despite seeing those impressive rates shrink throughout 2020, people have continued to move their money online.

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The pandemic affected banking in several ways. Of course, social distancing and the need for less contact played a part, but for Garrabrants, there’s more to the story. “Clearly, the pandemic has caused people to prefer digital partly because they’re concerned about interactions,” says Garrabrants, “but also because the banks have cut hours, they have cut locations, making it more difficult. The branch experience degrades naturally as a result of all of the things that had to be done as a result of the pandemic.”

COVID-19 affected not only consumer banking, but also how businesses do their banking. Garrabrants says, “On the small business side particularly, we’ve seen incredible growth in our application volume and, frankly, I wasn’t sure how that would go. Small businesses have been in the crosshairs as a result of a lot of the pandemic policies that have been enacted. But there are a lot of businesses that are forming, taking off, trying to save money, or simply find a way to do their business in a manner they prefer to do.”

Traditional banks offering digital banking solutions

Online banks like Axos Bank aren’t the only ones offering new banking methods, and the pandemic has accelerated that trend, too. The majority of traditional banks provide at least limited account access online or through mobile banking apps. Some brick-and-mortar banks even offer full-service online banking solutions that rival those of online banks.

If you’re a traditional bank customer, there’s a chance you pay a premium for these services, whether you know it or not. According to Garrabrants, “You could be at a branch-based bank and be a fully digital customer. There are a lot of those customers that exist. If you are a branch-based bank with lots of digital customers, then what you are essentially doing is you are basically carrying a set of operating costs that you have to monetize by passing on a lesser value proposition to your customers.”

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Garrabrants continues, “I hear our customers say, ‘You know what? I finally decided to make a switch. I was so sick of paying overdraft fees, but I like the idea of how I could walk into a branch that was down the street. I like the idea of being able to do that, but I never did. So I pay these extra fees, and now I’m sick of it. I’m just not going to do that anymore, even though I liked the security blanket of having the branch.'”

Online banking will continue to be a better option

With the recent news of approved vaccines, there’s hope that the world will return to some sort of normality soon. Even if that happens, it’s hard to see everyone going back to their old ways of banking.

“Are people going to continue to utilize the bank in traditional ways?” asks Garrabrants. “Are they going to change back to branch-based banking? I think, especially for a lot of the transactional type of activity particularly, the answer is no.”

He says banks have been forced to rethink what to offer in physical locations. “And I think after the pandemic, you will continue to see branch consolidations and a focus on digital channels.”

Is online banking less secure than traditional banking?

Of course, not everyone is excited about banking online, pandemic or no. We live in a digital world, but there are still holdouts who are nervous about trusting online banks and other businesses that only exist digitally.

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According to Garrabrants, though, online banking, in many ways, is safer than traditional methods. For instance, “When you write a check to somebody, that person is getting your account number and your routing number for your bank, as well as the address for your house, whereas if you simply sent the check via digital banking, Venmo, or some digital channel, you would actually be giving out significantly less information.”

What’s next?

For Garrabrants and Axos Bank, expanding services is the order of the day. Axos hopes to offer a comprehensive “digital ecosystem” to cover a wide array of financial services. The end goal, he says, is “to make financial services better, faster, more relevant, and cheaper for customers.”

Given the trend toward digital banking and the demands of the pandemic, it seems likely such digital ecosystems will prove more and more enticing.

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