By Christopher Evans, Director at Collinson Group
If you were in any doubt that mobile is the platform bringing the next generation of innovation, look no further than Pokémon Go. Since launched, it has kick-started a global phenomenon, reinvigorated augmented reality technology, earned huge revenues for its creator, and boosted Nintendo’s share price dramatically.
The fact is, mobile is now the de facto platform of choice for today’s consumer. With the smartphone market reaching saturation point, there is simply no excuse not to invest in developing a feature-rich banking experience. This includes everything from checking statements, to transferring money, paying bills, depositing cheques, opening accounts and real-time customer service.
In our global research into the top 10-to-15 percent of earners, we found that 81 percent used apps to manage their finances, and almost two-thirds (63 percent) agreed they made digital payments whenever possible. The key to business success has always been to be where the customer is. In decades past, that led to the deployment of country-wide branch infrastructure, but as the digital revolution takes hold, this investment now looks precarious at best. Banks are either cutting back their inventory to save costs or experimenting with new ideas—such as being a hub for click and collect purchases—in an attempt to continue the relevance of the branch.
The fact that 46 percent of respondents would consider a branchless digital bank if they were to switch in future is the loudest, clearest signal yet that change is coming. With banking licences for digital-exclusive banks, such as Starling, becoming more common, you begin to understand just how impactful this disruption will be.
When we asked how people like to bank, the results are evenly split. Twenty-nine percent prefer using the website; 26 percent choose visiting a branch; 24 percent bank via an app; and 21 percent over the phone. The accepted reasoning for this is because discussing a mortgage or a loan is still something people would rather do face-to-face, while sorting out a problem is always easier over the phone. It is still significant that a banking app is almost considered equal in experience terms to the branch.
The future of digital engagement lies in tapping into what customers want and delivering services that excel on mobile. When we gauged how important digital banking was to consumers, 63 percent answered “very”. For mobile banking, this was 57 percent. So it seems obvious to claim that consumers the world over are demanding banks launch and improve their digital offers. But how can they do that?
The answer lies in looking at consumer behaviour in adjacent industries. Fuelled by technology and the rise in prominence of Millennials, global society has flocked to an on-demand culture that prioritises convenience. We binge-watch whole TV seasons over a weekend instead of an episode every week; we summon cars at the tap of a screen; and we wait at home for our groceries to come to us.
The banking industry needs to emulate this digitally as the Millennials and the next crop, Generation Z, become even more important over the next five years. The industry needs to place the customer experience at the centre of product development. Looking at the services that customers value, we see that convenience resonates in banking, too. The most-valued account add-ons, according to our research, are health insurance, travel insurance, lost-card assistance, vehicle-breakdown recovery and identity-theft protection. And yet, how many banks are using their digital platforms to sell these services? Travel insurance obtained via a bank was the most popular add-on, but even that was only obtained by 18 percent of our survey’s 6,000 plus respondents. Imagine if banks effectively marketed these services, expanded into new areas such as airport-lounge access, and managed all interactions, too. The customer would instantly feel a closer affinity to his or her bank, something that would go some way to upping the degree of personalisation offered as well as raising trust scores.
If the banking industry wants to go further to expand its digital offerings, it should look into integrating its payments platforms into its services. Apple, Samsung and Google have all stolen a march on the industry, and though some banks have dipped their toes in the water with their own attempts, none has a sure-fire winner on its hands. Thirty-eight percent of the affluent global middle class has a digital wallet installed on their phones. When we look at the demographics within that, we see 26 percent are Baby Boomers, 38 percent are Generation X and 46 percent are Millennials. The trend is clear: customers coming of age and growing in value to banks are using mobile for almost everything. It is almost as if the customer has now become the point of sale. They choose the platform and the services they want, and if banks are not meeting expectations, they will move on.
We observed a 4-percent rise in consumers agreeing that they received a consistent experience across all channels, including digital and mobile, over the past 18 months. However, this could be in jeopardy if investment in the digital experience does not continue, leaving customers to feel their needs are not being met. Take, for example, a spend analysis of customer outgoings. Nearly half (48 percent) want their bank to offer this. It would take some smart software to automatically categorise spending habits, but the added value is immediately apparent.
So, too, would be a loyalty programme that rewards customers with targeted offers based on spending. For example, if a bank could notice if parents had just been on holiday with their kids—thanks to hotel and hire-car bills, alongside foreign-exchange charges—they could offer a discounted spa weekend once they returned. This takes engagement to an emotive level that is much more likely to strengthen the customer relationship.
Of course, the large incumbents may not find it easy to implement such a strategy, but the danger is, for those who delay, that challengers are already thinking about all of these things. And they also come from a culture in which engagement is central to everything they do. Digital and mobile are the future, of that there can be no doubt. The winners will be those who fully grasp how important delivering an unbeatable customer experience is.