I remember opening my first bank account when I was young. The bank branch manager was a neighbor that my family knew well, and we went to the bank branch to open the account. I received a shiny new passbook for my account - which I would use to log every entry in and out of my account. Over time, I got to know the tellers I would visit, and I can still recite the numbers on that account, as I wrote them clearly on the back of every pay check that I deposited into that account.
One day, ATMs arrived and I slowly stopped going to see the tellers to get cash. Eventually, I stopped going to see the tellers to deposit checks too. Nowadays - most of my banking is done without any human interaction at all - either via the web or on a mobile device. And my story is not unique – does this mean that branches are no longer important the banking ecosystem?
Mobile is not yet the new branch
According to a 2017 survey by The Financial Brand, Mobile is beginning to challenge the branch for top stop as a channel preference, but customers still feel a very strong affiliation toward the brand. Fully 28% of banking customers preferred the branch, 26% preferred banking via a mobile app, while 18% chose the banking website. In addition, 19% of customers prefer using a mix of online, mobile and branch channels. And as we will see below, customers have an even stronger preference for the branch when it comes to signing up for new products – making the branch the primary driver of revenue for banks in 2017.
New channels have blurred ownership
This was echoed on last week's webinar called First Impressions Matter - Understand your Customer, where Bob Meara of Celent, reviewed the history of banking and how far it has come over the years. From branch-only, to the addition of call centers, to the ATM, online and today to mobile banking applications.
In that time, communications channels were very personal and clear. They were also:
1. Well defined
2. Managed by a group who were charged with optimizing the channel
3. Managed through clear key performance indicators
4. Governed by customer utilization metrics
Today, however, the introduction of omnichannel banking has blurred the objectives of each channel - it has become harder to understand who owns channels of communication and many banks are struggling to learn how to leverage each of these channels.
Finserves struggle to keep pace
Meanwhile, the ability of banks to service the customer hasn't kept pace with the retail industry - which is very much setting the tone for the kinds of experiences that consumers want to have going forward. Many finserves are struggling to keep pace, as they attempt to accommodate new channels using paper-based workflows and legacy systems. In a Harris Poll conducted in October 2017, 64% of respondents believe that retail sites know more about their shopping habits than their bank knows from their financial transactions.
Even worse, some organizations have opted to split acquisition channels and run them independently, resulting in a disconnect between the prospect experience and the customer experience - causing customers not to get the omnichannel experience they are expecting. According to Celent, in mobile and ATM channels, if they are offered at all, it is rarely optimized for the device that the customer wants to use, often leading to poor customer experiences.
And while banks may desire to be less reliant on branches for customer acquisition, very few have moved the needle when it comes to leveraging digital.
Bank of America recently announced improvements to mobile banking - and that 25% of new customers come through the digital channel - despite massive investment by the bank in digital channel support for onboarding.
Banks cannot remove branches
Beyond customer demands that services continue to be offered through the branch, banks are unable to move away from branches due to their internal metrics and processes as well. According to Celent:
• Just 1 in 10 FIs are currently exceeding their sales goals through digital channels.
• Most banks/ credit unions track digital application completion rates, but banks don't have a mechanism for following up on these
• Most don't have the ability to follow up on these very valuable digital leads at scale
• Only 1 in 5 banks were able to connect the dots between online applications and the contact center
• At 2/3 of banks, customers that begin an application on 1 channel have to start over again when they switch to a new channel
Yes, the way that consumers shop for financial services is changing - they are educating themselves and deciding between providers based on what they find online. But 2/3 of customers still open their accounts in the branch.
According to Mr. Meara, Celent found the following reasons for why 66% of customers still choose to open their account in the branch:
• 61% of people felt more comfortable talking to someone in the branch.
• 40% had questions
• 38% said it was habit
• 26% believed it would be faster
• 18% had to visit the brand anyway
• 17% didn't know they could open the account online
• 16% worried about security
• 5% ran into other issues
What this means for customer acquisition
Overall, the acquisition experience needs to be inviting for customers, because poor customer experience at the point of account creation turns directly into lost sales. It also needs to be omnichannel - customers don't think about things in terms of channels, they think about things in terms of ease of experience, and branches continue to play a critical role, along with mobile. Designing experiences to be mobile first must become the norm - just looking casually at the growth of online shopping this holiday season, we can see how important mobile has become.
"As of 10 a.m. ET on Black Friday, Adobe said 61.1 percent of shoppers' visits to retailers' websites stemmed from mobile devices, including smartphones and tablets. Those devices were driving 46.2 percent of total online revenue, as consumers had already spent more than $640 million by Friday morning. That's an increase of 18.4 percent compared with a year ago."
BUT, the onboarding process also needs to be compliant and leverage legacy systems.
Many FIs, both large and small, are in similar positions
According to Celent, most FIs run disparate channel platforms, and while they want to have an omni-channel customer first layer, most are not close to having that. They are forced to run inflexible paper-based legacy DDA and LMS systems. These systems were designed to optimize processes and organize employees. They were not designed to optimize the journey from the customers' point of view.
Most process rely heavily on the branch for sales, and online prospects easily drop out of existing digital systems, and are not visible to the sales team. Sadly, many banks are unaware of the scale of the issue since they are not able to track these abandons and follow up on them at scale. And many have no, or poor, mobile acquisition capability.
A Holiday Wish List for Banking CX Professionals
If banking customers had a wish list this holiday season, this is what we'd most likely find on it:
• A clean, low friction, and device agnostic user experience
• Compatibility across existing channels, DDA and LMS
• A solution that was fast to complete and implement
• A solution that is secure and compliant behind the scenes
Where should banks start?
Start by looking at your entire end to end process. Look at how you present your products, capture customer data, verify identity, qualify customer, obtain disclosure consent and then fund and fulfill customer onboarding.
It's important to start small - don't try to take on everything at once - omnichannel transformation is a long-term project - so you need to focus on what you can achieve. Leverage success form small initial projects to build confidence, and then figure out how you can take something that is a branch journey and port it across to other omnichannel journeys.
It is also important to set the expectation and accept that transformation can be painful - there is going to be a level of pain when you are breaking your processes and rebuilding them. In the end, however, you will end up with a process that is much more customer focused - allowing you to differentiate your brand and offerings for long-term success in a world defined by CX leaders.
Interested in learning more
Access the full complimentary webinar "First Impressions Matter- Understand your Customers" featuring guest speaker, Bob Meara, Senior Analyst at Celent here: https://de.quadient.com/resources/first-impressions-matter-understand-your-customers