Online service delivery channels have been gaining popularity among banking customers globally, but banks are not doing enough to keep up with customer demands according to a recent global study by Chicago-based Bank Administration Institute (BAI), an independent research entity, and analytics firm SAS.
The consumer portion of the survey had 1,250 respondents while the financial institution portion of the study had 574 respondents over multiple surveys from BAI’s executive panel representing banks of various sizes in the US.
Consumers now expect a seamless, high-quality experience across all digital channels, including online and mobile.
Financial Institutions (FIs) are responding to consumer demand by providing these channels and developing new systems and features to satisfy customers. They’re already reaping some of the rewards of digital banking capabilities, but much of digital banking’s transformative potential remains unrealised.
The study found that 40 per cent of respondents use online banking at least five times a month. About 22 per cent use mobile banking just as much.
In addition, 43 per cent reported using online bill pay at least twice a month. In fact, many respondents indicated online or mobile is their preferred channel for a variety of relatively sophisticated tasks. In addition to the 66 per cent who prefer these channels for transferring funds, 46 per cent prefer them for managing investment accounts and 18 per cent even prefer them for resolving an issue with an account.
Though satisfaction varies by bank size, in general more than 40 per cent felt neutral or worse about mobile banking.
Customers are increasingly relying on digital banking services to meet their financial goals. Nearly two-thirds (66 per cent) of consumers say that personal financial management tools are important digital offerings from their banks, according to an AT Kearney survey.
Mobile banking users regularly check their account balances and commonly elect to receive balance alerts, either via text message, according to a Federal Reserve survey. If their balance or available credit is too low, they will forego large purchases. Taken together, these trends point to an important conclusion that consumers want and expect financial institutions to learn their preferences, just as online retailers do, and to go one step further to understand their goals.
Consumers who rely increasingly on mobile devices are experiencing more convenience and personalisation from retailers. Naturally, they expect the same from their financial institutions. Consumers want and expect banks to learn their preferences, just as online retailers do, and to be a step ahead in understanding what they want.
“The only way to provide the services customers increasingly demand across all channels is by applying advanced analytics,” said David M. Wallace, global financial services marketing manager at SAS.
“Analytics enables banks to combine data from wherever a customer interacts with them — online, in store or mobile — to create a clearer picture of each customer. That view makes it more likely that they can keep current customers and attract new ones.”
On the positive side, dissatisfaction means room to capture new market share, especially with millennials. These young adults are just selecting their primary banking relationships. And they’re especially partial to mobile. By attracting millennials today, financial institutions can solidify relations with them as they approach the years when they’ll need more sophisticated financial services.
But the effort can’t stop with starting an account — millennials can be fickle. According to the survey, 38 per cent of millennials ages 18-20, nearly half of ages 21-24 and 40 per cent of ages 25-34 indicated they would switch to a new financial institution if it offered innovative products and services.
Even for those customers who prefer digital channels, personal service matters. Nearly half of customers ages 21-24 believe high-quality personal service is more important than financial expertise. Those numbers dip only slightly in subsequent age ranges.
Still, while many customers prefer digital, they are not using it exclusively. They may visit a branch once, pay bills on the website and deposit cheques via mobile. The personal relationship can’t get lost across channels. So the financial institution that creates an ideal customer service experience in an omni-channel environment will win.
By Babu Das Augustine