Why Banks Need to Get with the Virtual Program

Updated June 1, 2026

Consumer banking has gone digital, and there is no going back. Three quarters of US adults now bank online, managing everything from deposits and transfers to loan applications and account changes without stepping into a branch. Digital banking is defined by three things: affordability, convenience, and instant access to information. Customers expect to understand their financial standing in real time, plan for long-term goals, and handle emergencies without visiting a branch. The shift that started years ago has become permanent. Banks that cannot meet customers where they are, on any device, at any hour, are not just falling behind. They are losing business.

Checking a balance or transferring money is not enough anymore. Customers expect the full suite from any device, at any hour, without visiting a branch:

• Mobile check deposit
• Bill pay and peer-to-peer payments
• Online loan applications
• Real-time account alerts and financial planning tools

Total remote banking is the baseline. Banks that treat digital as a secondary channel are watching customers walk out the door.

Key takeaways

• Digital is the baseline: Three-quarters of US adults bank online; digital is no longer a secondary channel but a primary requirement.
• Competitive pressure: Traditional banks are losing customers to online-only institutions that offer lower fees and superior user experiences.
• Generational shift: 99% of Gen Z and millennials use mobile banking for complex tasks like budgeting and credit monitoring, not just balance checks.
• Retention through UX: Satisfaction alone is not enough; banks must eliminate friction points where digital journeys force customers into physical branches.
• Strategic innovation: Success requires prioritizing mobile-first features like instant loan approvals and remote online notarization.

Banks are losing customers to online-only competitors

Customers today do not just want digital access. They expect a full-featured experience:

• Credit score monitoring and budgeting tools
• Customer support through chat or messaging
• Seamless, intuitive design across all devices
• 24/7 availability with no downtime

Younger customers in particular treat these capabilities as non-negotiable. If your customers cannot find what they need online, they are gone. That is not a prediction; it is already happening.

Online-only competitors have structural advantages that traditional banks must understand and respond to.

Common tactics online-only banks use to win customers

• Offer lower fees and zero minimum balances by eliminating branch overhead
• Pay higher interest rates on deposits and pass savings directly to customers
• Deliver faster, more intuitive mobile and web experiences
• Build trust and scale entirely through digital channels

What you can do

• Audit your fee structure against online-only competitors
• Invest in UX improvements that match the speed and simplicity of digital-native banks
• Highlight your in-person relationship advantages while meeting customers on every digital channel they use

Banks are losing customers to online-only institutions because those competitors often offer lower fees, higher interest rates on deposits, and a more seamless digital experience. The FDIC notes that online and mobile banking now enables consumers at any bank, branch-based or not, to manage finances remotely. The capabilities are no longer a differentiator. The quality of the experience is. Traditional banks that do not match this level of digital execution risk losing customers who prioritize convenience and cost.

Digital services build loyal customers

A Chase survey found that 99% of Gen Z and millennial customers use online banking, not just for checking balances, but for budgeting, monitoring credit scores, and setting savings goals. They expect secure, 24/7 access to their financial life from any device. For banks, the takeaway is clear: convenience and flexibility are not differentiators anymore. They are table stakes.

Consider this: online-only banks, institutions with no physical branches at all, have proven that trust and scale can be built entirely through digital channels. Ally Bank, for example, has attracted more than 2 million depositors and financed over 4.5 million vehicles without a single face-to-face interaction. These institutions carry the same FDIC deposit insurance as any branch-based bank, meaning customers get the same regulatory protections regardless of format. Banks that already have in-person relationships have an inherent advantage, but only if they pair that presence with a digital experience that matches what online-only competitors already deliver.

One in five adults have switched banks in the past two years, even though many report that they were satisfied with their old bank. Satisfaction does not prevent attrition. Extensive, well-designed digital services do. Banks that invest in digital experience keep current customers and have a real chance at winning back those who have already walked.

How to build a stronger digital banking experience

Many traditional banks know, in theory, that digital banking is here to stay, but are unsure of how to improve their digital experience. Security concerns are real and should not be dismissed. Credential theft, account takeover, and synthetic identity fraud are active threats across digital channels. The answer is not to avoid digital banking. It is to invest in it properly: identity verification, biometric authentication, and fraud monitoring that protect customers without adding friction to their experience.

True digital banking goes beyond a mobile app or online portal. It involves process automation, web-based services, and APIs that connect systems end to end. Banks that treat digital as a bolt-on will always lag behind those that build it into their core operations. Here are four strategies to strengthen your digital offering:

• ‍Prioritize what your customers want most: Your highest-risk moments tell you where to prioritize. Where do customers drop off? Where are transactions failing or getting flagged? Those friction points tell you exactly where to focus first. For banks with a large number of older customers, that may mean retirement savings tracking or easier access to recently deposited checks. For younger customers, it is instant loan approval and convenient mobile payment. Know your data before committing resources.
• Design for customer experience: Younger customers benchmark their banking experience against every other digital interaction they have. Frictionless does not mean unsecured. It means identity checks and fraud controls that work in the background, invisibly, without slowing the customer down. The goal is trust that does not feel like a barrier.
• Get your employees on board: Your frontline staff need to understand digital workflows as well as your customers do. When someone walks into a branch with a question about their app or a pending digital transaction, the answer cannot be "go to the website." Train your team to bridge both channels, because your customer experience is only as strong as its weakest touchpoint.
• Embrace innovation: Online notarization is one of the highest-impact areas where trust and convenience converge. The FDIC notes that services like notarizing documents have traditionally required an in-person interaction with a bank employee, making them a natural bottleneck in a digital-first world. With Proof, customers can verify their identity, sign, and notarize loan documents from any device, without scheduling an in-person appointment. That is a faster close, a better customer experience, and a defensible audit trail, all in one workflow.

Unify the customer journey, online and offline

A great digital experience creates loyal online customers. But the best approach is to ensure that no matter which channel a customer chooses, the experience feels cohesive and connected. That means more than a polished app. True digital banking requires an end-to-end platform connecting the front end that customers see, the back end that employees manage, and the middleware that ties them together. With each advancement to your virtual offerings, think through the full customer journey to make sure it holds together end to end.

Consider a common scenario: a customer shops for loans and searches for better interest rates online, which naturally leads them to apply for a new account or loan through a digital channel. What happens when that application process suddenly requires them to pick up the phone or go into a branch to complete the transaction? The customer journey is interrupted. Many people will abandon the process if the in-person step is too inconvenient, and you lose the transaction.

Banks need to analyze the common customer journeys across both digital and brick-and-mortar locations to identify where they might be losing customers. Those friction points are opportunities to improve the experience with better digital capabilities and capture more transactions as a result.

The banks that move now will keep the customers they have and win the ones still looking. Proof helps banks secure every customer interaction, from onboarding and account opening to loan closings and ongoing account changes, with identity verification, online notarization, and fraud detection built into a single platform. See how Proof works for financial services.