The growth of online banking and how to mitigate the risks of financial exclusion
The use of online banking is becoming increasingly widespread and the digital divide across age groups is showing signs of narrowing. But for some people (particularly the elderly), the digitalisation of banking services and branch closures can be a stumbling block to doing their banking and getting hold of cash.
11/02/2025
People are increasingly doing their banking online. But many choose not to, particularly among the older generations, preferring instead to pay in cash and handle their banking in person. For them, branch closures or having to go farther to withdraw their cash can be an obstacle to managing their money and making payments, as having easy access to cash and other financial services is essential to everyone’s day-to-day lives. So, which population groups have difficulties in accessing banking services? What is being done to reduce these difficulties? What are the advantages and disadvantages of online banking? And will the digital gap disappear?
Means of payment and banks’ relationships with their customers have been transformed over the last few decades
, especially since the arrival of the internet and online banking, as Figure 1 suggests.
Figure 1
HOW DO PEOPLE DO THEIR BANKING?
SOURCES: Banco de España and Study on Cash Use Habits.
NOTE: Percentage of the general public using the different channels to do their banking.
As online banking has expanded, the number of bank branches in Spain, while still higher than in Europe, has shrunk considerably
Digital banking platforms and users have multiplied: in 2011 just 30% of Spanish households used online banking, but by 2022 this number stood at over 70% (see Chart 1), putting Spain above the European average, according to Eurostat. Paying by card has also become common, as have, more recently, digital payments, in part due to the success of Bizum, which now accounts for a third of person-to-person payments made in Spain.
At the same time, as a result of the financial crisis and the decrease in the number of commercial and savings banks, the number of branches has shrunk considerably, from over 45,000 in 2008, to stabilise at under 18,000 in recent years (see Chart 1).
Chart 1
NUMBER OF BANK BRANCHES AND USE OF ONLINE BANKING
SOURCE: Banco de España.
NOTES: Use of online banking by households as reported in successive editions of the Survey of Household Finances.
There is no denying that branch closures are not unique to Spain, or that the number of branches per inhabitant remains higher in Spain (370 per million people in 2023) than in the euro area (303). But the dispersion of the country’s population makes it difficult to provide services in general (and banking services in particular) in rural areas, where the population is older, to boot. The use of online banking in Spain’s rural areas is widespread (65%) and it is slightly above the average for the European Union.
Banking services: usage and preferences
We have just published a report on the access channels to the banking services in Spain, where we address these questions.
Users of online banking rate it highly, citing its ease of use, speed and availability 24/7, wherever they are. But it is used more than it is actually named as a preferred option, in every population group considered. There are also major differences in take-up by age group, income level and level of education, with reticence stronger primarily among the elderly, but also among people on lower incomes or who have a lower level of education. This gap stems not only from their more limited digital skills, but also from the fact that these groups view online banking as being less secure than the alternatives.
All the same, Spaniards continue to prefer to handle their banking transactions in branch, with 30% saying it is their sole preference and over 60% naming it as one of their preferred options. And, as Chart 2 shows, in most population groups preference is higher than use. Users feel going to a branch is a more trusted and secure option, and most say that their transactions are better handled in person. Indeed, the groups most reluctant to do their banking online also show the strongest preference for going to a branch.
Chart 2
IN-BRANCH BANKING: USAGE AND PREFERENCE DEPEND ON AGE, INCOME AND LEVEL OF EDUCATION
SOURCE: Banco de España. In-person access to banking services in Spain: 2024 Monitoring Report
NOTES:
-Data from the Survey of Household Finances 2022. More than one option may be named as a preference and use. Use of a branch refers to the past 12 months.
-The dots above the 45 degree line indicate a greater percentage of preference than of usage, while those below the line represent a greater percentage of usage than preference.
The change in banks’ relationships with their customers poses risks of financial exclusion for some vulnerable groups. It is important these risks be mitigated to ensure greater social cohesion
Lastly, the older people are, or the lower their income or level of education, the more they use cash and the less they rely on digital means of payment. These groups may have difficulty getting hold of cash or doing their banking if there is no bank branch or ATM nearby, and this could cause problems when they need to pay in cash or manage their day-to-day spending. They are therefore considered vulnerable or at risk of financial exclusion.
These issues have been a cause for social concern in Spain since the pandemic. Notably, a campaign called “I’m old, not stupid” was launched in 2022, calling for action to make it easier for older people to access banking services. Banks responded by committing to alleviate these problems in two main ways:
i) by improving the services provided to the elderly in bank branches and through ATMs, and
ii) by deploying alternative in-person channels in rural areas such as mobile branches or Correos Cash (enabling cash to be withdrawn at rural post offices or delivered by rural postal workers).
The Banco de España has also launched initiatives to address the problem of financial exclusion:
- by promoting financial education, which is key to improving the use of financial services, through different programmes primarily targeted at schools and vulnerable groups;
- by monitoring access to banking services in an annual report;
- by regularly collecting data on access points and conducting in-person surveys on the public’s use of financial services, financial literacy and preferences;
- by analysing this information through research and assessing, through randomised control trials, the effectiveness of the measures to prevent financial exclusion.
Work is clearly needed to lessen the risk of financial exclusion for vulnerable groups. Among the obstacles faced is the difficulty in using digital banking and the reluctance to do so, but there is room for optimism about the narrowing of the digital gap.
What is the reason for this optimism? Chart 3 shows the changes in the public’s use of online banking, by age. In 2022, 94% of households whose reference person was aged 35 used online banking, compared with just 39% of those aged over 70. The corresponding figures in that year for people in their 50s and 60s were 82% and 72%, respectively, not far off the proportion of those in their 30s. These gaps were narrower than a decade earlier. And one would expect those who are well-versed in digital banking to continue using it well into old age. All this means that the digital divide between age groups is gradually narrowing. But it cannot be expected to disappear altogether, and the digital gap across income and educational levels may prove more persistent. In any event, this narrowing is good news.
Chart 3
ONLINE BANKING IS USED ACROSS ALL AGE GROUPS
SOURCE: Banco de España, Encuesta Financiera de las Familias.
NOTES:
-The lines in the chart depict the usage of online banking among households whose reference person was born in the period indicated, relative to their median age in the period 2002-2022. For example, the orange line, which represents those born between 1953 and 1962, reflects the trend in the usage of online banking between 2002 and 2022, when the median age of this group rose from 45 to 65.
While there is no going back on digitalisation, it is important to mitigate the risks of financial exclusion that the new banking model will mean for vulnerable groups. Having easy and secure access to banking services is paramount to ensuring social inclusion and cohesion. At the Banco de España, we are aware that work in this area must continue.
DISCLAIMER: The views expressed in this blog post are those of the author(s) and do not necessarily coincide with those of the Banco de España or the Eurosystem.
