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Perspectives

Digital Success: Six Ways Retail Banks Can Find It

2015-04-02


Despite their best efforts, traditional banks have a lot of catching up to do online; here are six ways they can get with the binary program.

Despite their best efforts, traditional banks have a lot of catching up to do online; here are six ways they can get with the binary program.


Having been spoiled by online interactions with Amazon, Google, Apple and others, consumers expect a similar experience from their banks. Fast. Intuit. The ability to do everything online without ever visiting a branch.

First-movers such as AllyMoven and Simple have been rewarded for doing just that, increasing customers by as much as 300% annually, according to a recent Simple year-end report.

Most traditional banks, however, still treat customers as account numbers. Only 28% of customers are satisfied with the digital experience of retail banks, according to one study. And 73% do not feel valued by their banks, according to another. This is largely because brick-and-mortar banks have been slow to deliver compelling digital experiences. Although customers have wanted it for years, few have delivered.

Starting today, that all changes. From our research, here are six things retail banks can do to get with the times, delight customers and reap the rewards:

Put customers first (profits will follow).

Talking about the benefits of a better customer experience might seem trite. But it has a very real impact. Word of mouth referrals, reduced churn and incremental improvements net U.S. banks an additional $161 million annually, estimates Forrester Research. So the focus should be what customers want rather than what's convenient for banks. That includes things like responsive Web sites that let customers control all their finances from a single URL—whether on a desktop, tablet or mobile Web site. It also means a downloadable app that does everything a responsive Web site does, plus remote deposits and incorporating pleasing tracking tools such as those found on mint.com, the very things that endear customers to their finances.

Have a mobile-first mindset.

While banking Web sites should fully respond to all devices, the priority remains on mobile apps. The reason: Customers prefer apps over mobile banking Web sites and apps have higher engagement levels (66% of total hours per month vs. 34% on browsers). All told, more than 40% of banking happens on mobile apps and more than a third of customers say the mobile experience is a reason to stay with their bank. In addition to mobile deposits, customers want video conferencing a la Amazon Mayday from their banking apps, according to a recent Cisco report. Such would help banks offset the cost-cutting closure of customer service branches while maintaining service. All told, banks must ensure their apps are defect-free, feature rich and beyond what's expected from a conventional Web site.

Listen to and decode customer Code Halos.

Banks are sitting on enormous amounts of customer data—demographics, spending habits, financial interests, purchase intent, clicks, swipes, search history and comments on social media. With Code Halo thinking, all these signals can be harnessed into powerful banking insights. But you'll need to eliminate clumsy IT infrastructure to listen to, decode and react to digital footprints. No more siloed legacy systems. No more fixed architectures. No more capturing data without analyzing it or (worse) misinterpreting it. When basing promotions, customer service and upsells on actual customer usage, banks not only build a better product—they build brighter futures.

Put customers first (profits will follow).

Talking about the benefits of a better customer experience might seem trite. But it has a very real impact. Word of mouth referrals, reduced churn and incremental improvements net U.S. banks an additional $161 million annually, estimates Forrester Research. So the focus should be what customers want rather than what's convenient for banks. That includes things like responsive Web sites that let customers control all their finances from a single URL—whether on a desktop, tablet or mobile Web site. It also means a downloadable app that does everything a responsive Web site does, plus remote deposits and incorporating pleasing tracking tools such as those found on mint.com, the very things that endear customers to their finances.

Fatten margins with social media innovations.

Only 10% of customers use social media to interact with banks, according to Gallup research. The majority prefer ATMs, branches and apps instead. But the customers who do use social media are playing with a lot more bargaining chips. They are 33 years old on average, have more than $100,000 in investable assets and are traditionally the hardest demographic to reach. Further, they generate double the annual revenue (U.S. $2,528) for banks compared to nonusers of social media (U.S. $1,262), the Gallup study found. But it'll require more than mere participation to have an impact on this lucrative group. Understanding what they want on social media is required before devising specific banking content and features. For instance, Spain's giant CaixaBank allows users to view balances, execute account transactions and make small payments using Facebook. Such initiatives offer convenience, make banking a greater part of everyday life and establish connections with younger customers.

Enhance the branch and ATM experience.

While mobile and online banking remains the go-to option for customers, banks that spruce up non-redundant branches and deploy the latest technology for in-person transactions are seeing green. Wells Fargo, for example, is launching "neighborhood stores" located within high traffic grocery stores. Other banks are offering free Wi-Fi, iPads and large touch screens at branches to educate customers on bank benefits and products in a more automated way. Capital One, for instance, has transformed select Bosto branches into café's serving Peet's coffee. ATMs, too, are being upgraded, including behaving more like mobile devices to support a wide range of self-service tasks, remembering customer preferences such as language and account history and even card-less transactions, smartphone connectivity and live video chat with a remote teller—all things to charm a customer. 

Sustain a seamless omni-channel experience.

As customers demand greater access to their bank—better apps, responsive web sites, remodeled branches, personable call support and upgraded ATMs—banks must ensure a consistent experience across all touchpoints to avoid frustrated customers. To do this, however, traditional banks will need to upgrade or replace IT systems that fail to track customer interactions at all times in the cloud. An overhaul that integrates physical channels (branches, call centers) and digital ones (mobile and online) is needed to ensure anytime, anywhere and on any device access. Accordingly, customer-facing employees should have real-time access to the same customer data to more effectively serve customers. In doing so, banks can achieve a seamless, self-aware and smarter product.

Welcome to 21st century banking, where the customer comes first!

Figure 1

For more information, read our full report, Retail Banking: Delivering a Meaningful Digital Customer Experience. To learn more about digital banking read our three part series on digital banking, (onetwothree) or visit our banking practice.

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Digital Success: Six Ways Retail Banks Can Find It