How Not to Fail: A Checklist to Make Merger & Acquisition Branch Conversions Easier.   SEE THE LIST
Mitek | Millennials: The Next #MobileDisruptors

Despite Digital Banking Growth, Traditional Channels Survive

Findings from a national retail banking study found that despite growth in digital banking, most Americans still regularly visit their primary banks to interact with tellers and advisors, and also frequently contact their banks’ call centers.

Subscribe TodayAccording to a study by Market Force Information, online and mobile banking is unlikely to displace traditional retail branch banking anytime soon. Consistent with other recent studies by McKinsey and others, the research found that consumers continue to visit their primary banks regularly and still utilize their banks’ call centers despite increasingly using online and mobile banking.

Just because consumers use multiple channels does not mean they are happy. Market Force found that one in five consumers are dissatisfied with their current financial provider and that less than 50% of consumers would recommend their current provider to a friend or colleague. The study also found that Chase and U.S. Bank are the favorite national banks, and that PayPal is currently the most popular digital wallet provider.

Buy ‘Strategic Planning Imperative: Capitalizing on Digital’s Promise

Human Interaction Improves Banking Satisfaction and Loyalty

Despite the rise in popularity of online and e-banking, consumers continue to value the face-to-face transactions and interactions at a physical bank branch. The study found that 72% of retail bank customers had conducted a transaction with a teller in the previous 90 days – 21% walked into a bank to consult with an advisor, and 27% contacted their bank’s call center.

An identical study conducted by Market Force in the UK found that much fewer – just 57% – had made a teller transaction, while just slightly fewer had consulted with an advisor (18%) and contacted a call center (25%).

Consumer_interactions_with_primary_bank

Market Force also uncovered a discernible link between consulting with an advisor and customer satisfaction. Of those who spoke with an advisor in the previous 90 days, 57% were likely to recommend their bank to others, compared with just 47% of those who did not speak with an advisor. This finding validates the move by some banks that are reallocating the space in existing branches, providing more space for platform personnel and less for teller transactions.

“Our research underscores how critical the advisor role is in retail banking – not just because banks need to sell their product portfolio, but also because it’s an opportunity for them to gain a competitive advantage in customer loyalty,” said Cheryl Flink, Chief Strategy Officer for Market Force. “We found that 17% of those who consulted with an advisor had a less than great experience, which tells me that many banks could be doing a better job of focusing on consumers’ financial well-being with superior advisory services.”

Satisfaction with teller transactions was found to be high, with 73% of consumers being ‘very satisfied.’ The satisfaction level with call center transactions was not nearly as high, with 53% being ‘very satisfied’ and 23% being unsatisfied with the interaction.

Kiosk & Display | The Perfect Playlist

Chase and U.S. Bank Ranks Highest in National Bank Satisfaction

As part of the evaluation of banking interactions, Market Force looked at which national banks stand out as consumers’ favorites. Out of the five most frequented national banks, Chase and U.S. Bank ranked first and second, followed by PNC Bank, Wells Fargo and Bank of America. For the rankings, Market Force asked participants to rate their satisfaction with their primary bank and their likelihood to refer that bank to others. The results were averaged to attain a Composite Loyalty Score.

Favorite_national_retail_ banks

According to the study, Chase and U.S. Bank scored first and second in nearly all of the attributes that matter most to their customers, including financial stability, ease of doing business and transparency. PNC Bank, Wells Fargo and Bank of America ranked third, fourth and fifth, respectively, in these categories.

Majority of Consumers Have Downloaded Mobile Banking App

The importance of moving consumers to mobile channels is well documented. In addition to providing the potential for an improved real-time customer experience, a digital banking customer can also result in an overall reduced cost to serve. In the Market Force research, 80% of consumers said their primary bank offers a mobile banking app and, of those, 65% said they have downloaded it.

Interestingly, this is slightly higher than the UK where just 63% report having downloaded their bank’s mobile app. Three in five found their mobile banking app easy to use.

Percentage_of_consumers_who_downloaded_their_banks_mobile_app_b

Not unlike many research studies in the past, the primary ways consumers in the United States were found to be using their bank’s mobile app were to check balances, check statements, transfer funds, deposit funds, use the quick-check balance feature, pay bills and find an ATM or branch. Also consistent with other research, very few consumers use the mobile banking app to pay others or to establish direct debits. It is a different story in the UK, where larger percentages use their mobile apps for these two purposes, and much fewer use the app to deposit funds or find ATMs or branches.

Most_used_mobile_banking_applicaitons

In the United States, 46% of those who have not downloaded their bank’s mobile app said they do not see the benefits of using their phone for banking, with 36% being concerned about the security of their information and 10% questioning ease-of-use. These figures were similar in the UK.

Market Force found that Capital One customers thought their mobile banking application was the easiest to use, with 75% giving the app a ‘top box’ rating. Regions (72%), Citizens (67%), Chase Bank (66%) and TD Bank (65%) also received respectable ‘high box’ ratings. PNC (54%), Wells Fargo (57%) and U.S. Bank (57%) received the lowest ‘ease of use’ ratings.

Adoption of Digital Wallets Still Lags

Despite all of the media attention on doing payment transactions using a phone, Market Force found the adoption of mobile wallets (prior to ApplePay’s launch) still fairly low, with only 7% reporting that they use digital wallets – with 45% of those being female and 55% being male. Penetration is highest among the 25–44 year-old demographic, but not by much. In fact, Market Force found that 20% of those using digital wallets are between 45–54 years old, and 22% are over 55 years old.

When viewed from an income demographic perspective, the highest use was in the $25,000 – $49,000 income range (24% of users), with usage dropping as income increased.

Age_demographics_of_digital_wallet_users

Awareness seems to be the biggest barrier to adoption of digital wallets. When asked why they are not using digital wallets, 62% said it is because they are not familiar with them.

Other prevailing reasons given were that they provided no benefit beyond current payment channels (27%), concerns about security (22%) and concerns about personal data (20%). Difficulty was cited by only 2% of those polled. Interestingly, 88% of households who didn’t already have a digital wallet showed no interest in investigating or using a mobile wallet in the next six months.

PayPal Most Used Payment App

At the time of the study, PayPal was clearly the most popular digital wallet provider. It claimed 60% of market share, with Google Wallet earning 43%, Apple Passbook with 17% and City Wallet by Citibank with 2%.

Digital_wallet_provider_market_share

Implications for Financial Institutions

Overall, the Market Force research reinforces other studies that show that as important as mobile and online banking are, and despite a lot of noise regarding mobile wallets, consumer habits are slow to change. People continue to visit traditional branches for a variety of reasons, with the impact of these visits on overall satisfaction being significant. This is especially true with visits to advisors, where consumers usually go to for problem resolution and to open new accounts.

While the use of digital banking continues to increase, it is clear that consumers continue to use mobile banking apps for basic transactions, such as checking balances and transferring funds between accounts. It is important for banks and credit unions to continue an education process to move consumers up the learning curve, enabling them to make payments and conduct more complex transactions.

Finally, making payments using a mobile device continues to be an unusual occurrence for most households for a variety of reasons (not the least of which is the lack of merchants accepting mobile payments). With the introduction and support of Apple Pay by the largest financial institutions, mobile payments will definitely increase. The real questions is … how fast.


About The Research

The online survey by Market Force was conducted in September 2014 across the United States. The pool of 3,733 respondents represented a cross-section of the four U.S. census regions, and reflected a broad spectrum of income levels, with 46% reporting household incomes between $25,000 and $75,000 a year. Respondents’ ages ranged from 19 to over 65. Approximately 58% were women and 42% were men. Three quarters were employed at least part time.


Jim MarousJim Marous is co-publisher of The Financial Brand and publisher of the Digital Banking Report, a subscription-based publication that provides deep insights into the digitization of banking, with over 150 reports in the digital archive available to subscribers. You can follow Jim on Twitter and LinkedIn.

Search For More: Customer Experience, ,

All content © 2016 by The Financial Brand and may not be reproduced by any means without permission.

Digital Banking Report | The Power of Personalization

Comments

  1. Most digital offerings from banks are just basic versions of statements with the ability to transfer funds and check balances. Limited insight, limited help, no advice or ability to interact with a real human. The fact the study says customers still have to go to a branch to open an account speaks more about the lack of true innovation in banking rather than “Traditional Channels Reign”. There’s just limited customer choice in the way traditional banks operate.

  2. Finance is all about trust. Branches are one way to foster trust: It’s there, you can look at it, go into it.
    But they are not the only way to establish trust anymore.
    Just look – Paypal ist the best liked wallet out there, or so this study reports.
    How come? Because of Paypals impressive branch network?
    Nah.
    Don’t close all your branches tomorrow, but more important: Don’t stop listening to Brett King: There are new ways to build trust in the digital domain, and you better check them out.

  3. Ron Shevlin says:

    Interesting choice of the word “reign” in the title. The word “survive” could just as easily have been used. Not sure how you concluded that traditional channels “reign” from the study’s findings.

  4. Jim Marous Jim Marous says:

    You’re right. I like the idea and thanks to the magic of on the spot editing, I am going to use ‘survive’. It is interesting how much people say they use branches and yet the numbers continue to drop. Somebody’s lying 🙂

  5. David Mooney says:

    I, too, am having difficulty reconciling the widespread and persistent decline in branch transactions, along with my own “man on the street” research, with studies that report continued high branch use. Yesterday I polled a group of 16 executives, and only one said they had been in a branch in the last 90 days – and that was to get a lollipop for his daughter. What are those 72% visiting tellers for?

Speak Your Mind

*

Read more:
Four Core Principles to Designing a Superior Online Banking Experience
Close