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People Bank Online, But Prefer Branches for Service

A study by Empathica encompassing 15,000 Americans and Canadians found people prefer online banking, but like branch support when problems arise.

The report, which focused on identifying consumers’ preferred banking channels, revealed another strange contradiction in consumers’ banking behavior: even though consumers trust online banking, mobile banking still lacks mainstream acceptance.

For routine transactions, 41.4% of consumers indicated their preferred banking channel was online. This was followed by branches at 32.6%, ATMs at 23.3%, mobile a distant fourth at 1.5%, and finally the telephone at 1.3%.

Yet when faced with problems, consumer preferences shifted drastically. Consumers most often wanted to speak with a person when they had an account issue. 60% cited the desire to visit a branch with a banking problem, while 34% preferred using the phone. Only 6% would prefer to take up their issue online.

“Connecting with consumers in a one-on-one manner can drastically influence bank loyalty,” said Gary Edwards, EVP/Client Services at Empathica. “The importance of this is compounded during problem resolution. If you can quickly address a consumer’s concerns, they are more likely to be loyal to your bank than a consumer who never voiced any concerns at all.”

For major transactions, such as a home loan, 78.7% of consumers preferred to visit the branch. Only 18.5% preferred the internet, 2.5% the telephone and 0.3% opted to use their phone. When opening a new account, consumers said they had similar preferences.

The Empathica study closely aligns with other studies The Financial Brand has seen in recent years, confirming the rise of online channels while also proving the continuing importance of face-to-face, branch-level interactions.

CUNA Mutual | TruStage Insurance Program

Consumers not rushing to adopt mobile banking

North American consumers still have yet to really harness mobile banking. In fact, 51.2% of US consumers and 60.3% of Canadian consumers say they do not trust the security of mobile banking, compared to the 21.7% of US and 26.2% of Canadians who say they do not trust online banking.

Out of all methods for transactions, consumers trust the branch the most (84%).

“Internet banking went through the same hurdles with privacy and security concerns,” said Edwards. “The more mobile technology is developed, however, the more you’ll see consumers using their mobile device for banking. Right now it’s just not at a stage where consumers trust device security, but the mobile channel will certainly play an important role in the future.”

While mobile banking has a very low percentage of primary users in Canada, those who use it express a surprisingly high level of affection for their financial institution. For Canadian consumers who cited using mobile banking the most for routine transactions, 83% were likely to recommend using the service to someone else.

“This goes against the notion that if you’re a mobile customer, you lack the touchpoints that build brand intimacy and the advocacy that follows,” said Edwards. “It’s actually quite the contrary, with these consumers maintaining better overall perceptions of services in general.”

In fact, the majority of those who said customer service was getting worse tended to use telephone banking as their preferred channel. Conversely, the majority of those who said customer service is not getting worse tended to use mobile banking most for routine transactions.

“Mobile devices allow consumers to have direct and immediate control over their financial transactions, which we believe leads to a perception that service is generally improving,” Edwards said. “In fact, what is improving is the efficiency, intuitiveness and immediacy of being able to transact. Not surprisingly, those who favor channels with more direct contact with service agents, during telephone banking, felt that customer service is getting worse.”

CUNA Mutual | TruStage Insurance Program

US vs. Canadian preferences

Results showed that 49.4% of Canadians favor online banking, 10 percentage points higher than Americans (38.2%), even though both countries are reported to have similar internet penetration rates around 77%.

For major transactions, 85.2% of Canadians prefer branches while only 76.2% US feel the same way. That is no doubt related to US consumers’ preference for online banking, coming in at 21.1% vs. 11.9% for Canadians. While fewer Canadians use the Internet as their preferred channel, 84% of those who do are satisfied with the experience.

For problem resolution, 36.5% of US respondents and 27.2% of Canadians use the telephone, while 57.2% of US and 66.9% of Canadians prefer the branch.

For routine transactions, only 0.8% of US respondents said it was their preferred channel, with 2.6% of Canadian respondents citing the same.

Mobile banking came in at the bottom, with only 1.7% of US consumers and 1.1% of Canadians saying it is their preferred channel for routine transactions.

Via: Bank Marketing News

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Comments

  1. Jim Flannery says:

    “For routine transactions, 41.4% of consumers indicated their preferred banking channel was online. This was followed by branches at 32.6%, ATMs at 23.3%, mobile a distant fourth at 1.5%, and finally the telephone at 1.3%”
    Hmmm, seems like these numbers need some context; from a banking standpoint making a deposit, cashing a check, and making a withdrawal are the most common “routine” interactions a person can have. How can mobile or web even be included as you can’t really conduct theses functions at any of these channels (except maybe the customers of a few FIs that offer remote/mobile deposit capture). If the questions were phrased by interaction type (i.e. “If you are depositing a check how do you prefer to do that”?) that would be more telling and I think you’ll see the preference is spread over multiple channels (ATM is top dog for withdrawals, Branch is top for deposits, Web is tops for payment,etc…)

  2. That’s a good point Jim. Those are survey questions people can actually wrap their heads around. Sometimes you see financial surveys use banker-speak: “Which is your preferred channel for transactions?” I dunno… What’s a ‘channel?

    As with all surveys, it’s important to remember that participants’ responses often reflect their feelings more so than their actual behaviors. A different kind of hard science is required to quantify what is really happening.

    I’d be curious to see how this study’s data reconciles with data from financial institutions. For instance, they should know what percentage of deposits come from branches vs. ATMs vs. direct deposit vs. remote deposit vs. mobile, etc.

  3. Paul Stull says:

    I am currently in love with the esurrance tag line, “People When You Want Them, Technology When You Dont” ™. They must have a great ability to understand the consumer on a very basic level. They get customer service and have boiled it down to a mantra that is true, true, true!

    This explains why the more channels you build, the more people access your services. It explains the need for both bricks and mortar and technology. It explains the study so aptly on point in this FinancialBrand post.

    People don’t want to stand in lines or deal with other people on a regular basis, but they do want to know if something goes wrong there is a place they can get their hands around your neck.

    Is there some brave CU CEO out there that could tell prospective members, “I’m putting my neck on the line and if you ever need to get your hands around it, here I am.” Now that is a point of diferentiation with banks that no one can beat.

    Maybe someone will write a blog post about what CU’s can learn from essurance. Meanwhile if you need to get your hands around my neck, I’ll be in Phoenix, AZ, otherwise send an email.

  4. Great insights Paul. Thanks for sharing.

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