Asian consumers love digital banking — here’s why Americans are less excited about it

If you want to see what your relationship with your bank will look like in a few years, look to the East.

Consumers in Asia are rapidly using mobile banking for more services, making visits to a physical bank branch rare. In fact, visits to bank branches make up just 10% to 25% of monthly transactions in Asia, according to the consulting firm McKinsey & Company released Monday.

In developed Asian countries, some 97% of adults use banking services on their smartphones. That compares to about 62% of Americans who say they use a mobile banking app, according to a separate report by Bank of America.

McKinsey surveyed about 17,000 people in Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam. In Asia, “consumers are ready, and they are migrating,” said Sonia Barquin, a partner at McKinsey who is also one of the lead authors of the report.

Up to 80% of customers in Asia say they would consider opening an account with a branchless bank, McKinsey found. In contrast, just 25% of U.S. consumers say they would like to open a bank account without a bricks and mortar branch, according to a separate survey by the consulting firm Accenture in 2016.

Here are some of the reasons the U.S. lags behind Asia when it comes to banking.

The popularity of smartphones in Asia

In many Asian countries, particularly emerging nations like South Korea and India, consumers went directly from doing most of their activities off-line, to doing them on smartphones, Barquin said. In emerging Asia, many people have smartphones, even basic ones.

In the U.S. and Europe, there was an intermediate step: Laptop and desktop computers, which didn’t catch on as widely among many Asian populations. Asian consumers are also more comfortable with using those smartphones for payments at stores, as the popularity of the payment system Alipay BABA, +1.55% has shown in China.

A different relationship with data

In developed Asian countries, 23% said they would be willing to share their data for tailored advertising, McKinsey found. In contrast, 63% of Americans surveyed by Accenture said they would be willing to give their primary bank access to their mortgage, credit card and student loan data so they could use it to present more relevant products in the future.

But reality maybe a bit different. The public’s outcry over incidents including the recent misuse of Facebook FB, +0.19%  data by U.K.-based data research firm Cambridge Analytica, suggests there is a lot of mistrust about data use in the U.S., Barquin said.

Fear about the government tracking purchases is a major reason many Americans still prefer to use cash for their payments. About 10 million families in the U.S., or nearly 8% of households, also don’t use any type of bank account, for the same reasons.

U.S. regulations are tighter

PwC called regulation “the most important factor shaping banks today.” Some 47% of 560 financial-institution executives said regulatory compliance is a top challenge for them, even more challenging than attracting new customers and increasing customer profitability. In Europe, that number was 40%. But in Asia, that was not cited as one of the top challenges at all.

U.S. regulations are a large hurdle for fintechs start-ups, executives at those companies have said. Republican North Carolina Congressman Patrick McHenry said in 2017 that financial technology worldwide “has a British accent,” because confusing regulations have held U.S. companies back, while those in the U.K. have gained ground.

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