Earnings Put Spotlight on Banks’ Full-Scale Digital Transformation

The shift toward digital channels in financial services shows no signs of slowing down, as evidenced by the latest earnings results from incumbent banks and financial services providers. 

During the first quarter, Bank of America logged a staggering 3.4 billion digital logins, with digital sales accounting for half of its total sales, as outlined in its earnings supplementals on Tuesday (April 16).

Additionally, the bank reported a significant uptick in digital households, reaching 748,000 in the quarter, representing 86% of its installed base. This marked an increase from 717,000 households and 84% penetration in the previous year. 

Notably, the utilization of Zelle for peer-to-peer (P2P) payments surged by 26% year-on-year to reach $106 billion in transaction volumes. Overall, Zelle transactions soared to nearly 223 million, overshadowing traditional check transactions, which numbered 100 million during the same period. 

CEO Brian Moynihan highlighted this quarter milestone during the earnings call, noting that “Zelle transactions [have] now passed the combined number of checks written, plus the amount of cash withdrawals from tellers and from ATMs.” 

Truist Financial Corp. mirrored this trend in its latest earnings report released on Monday (April 22). Digital transactions surged by 13%, totaling 76 million, while mobile app users increased by 8% to 4.9 million year-over-year. 

The North Carolina-based bank also observed that 77% of deposits were made through self-service channels. Furthermore, there was a notable uptick of 227,000 new Zelle enrollments in the quarter, representing an 11% increase from the previous quarter. This momentum follows increased use of the Truist’s automated assistant, launched in 2022, with 85% of customer interactions completed using it during the previous quarter. 

Synchrony Financial also echoed the digital trend in its latest earnings results released on Wednesday (April 24). The online bank highlighted a 3% increase in digital transaction volume driven by heightened customer engagement and a rise in active accounts. 

Furthermore, financial services firms are witnessing a surge in digital engagement among their customers. Dutch payments firm Adyen, which secured a banking license in the U.K. last year, reported a 51% year-over-year increase in digital processed volume during the first three months of 2024. Adyen attributed this growth to the expansion of an unnamed existing digital customer, along with accelerated volume from other large enterprise merchants.

“We think that we offer a premium proposition, and we price for that,” Ethan Tandowsky, chief financial officer at Adyen, said Thursday (April 25) during the company’s quarterly earnings call. “I think it is really a strong proof point that these customers are willing to expand wallet share with us and bring more of their business onto the Adyen platform.”

These developments coincide with a growing consumer preference for digital channels in conducting financial transactions, compelling financial institutions (FIs), particularly legacy banks, to innovate and offer solutions to meet this need. 

James Butland, vice president of payments and U.K. managing director at Mangopay, discussed this growing trend in a recent interview with PYMNTS, emphasizing the challenges faced by traditional banks due to their legacy infrastructure and technology. 

“The challenge that a traditional bank has, is that they sit on 150, 200 years of legacy infrastructure and probably 60 years of legacy technology. So, banks have found it difficult to innovate quickly,” Butland said. He noted, however, that change is ongoing as “banks are starting to realize the speed at which technology has changed the world.”