According to Adobe, 2017 will be the first year to break $100 billion in online sales in the U.S., an increase of 6% from the total of $94.4 billion for the holiday season in 2016. According to Adobe, consumers purchased $6.59 billion online during Cyber Monday, with purchases made on smartphones also breaking a record with $2 billion in sales.
According to Adobe, overall online traffic was up 11.9% for Cyber Monday. During the long weekend between Thanksgiving through Cyber Monday, mobile was a big contributor. In fact, 47.4% of visits were from mobile devices (39.9% from smartphones, with the rest coming from tablets) … representing 33% of revenues.
During the long weekend, $2 billion in sales were made via smartphones, which represented more than a 40% year-over-year increase, states Adobe. Meanwhile, Salesforce found that mobile accounted for 42% of order share and 60% of traffic on Black Friday, up from 34% and 52% in 2016, respectively. This is the first time that mobile volumes have exceeded those online. These radical changes in buying behavior are bellwether indicators for not only retail, but for other industries as well.
Increasing Impact of Mobile
“Shopping and buying on smartphones is becoming the new norm and can be attributed to continued optimizations in the retail experience on mobile devices and platforms,” said Mickey Mericle, vice president, Marketing and Customer Insights at Adobe. “Consumers are also becoming more savvy and efficient online shoppers. People increasingly know where to find the best deals and what they want to purchase, which results in less price matching behavior typically done on desktops. Millennials were likely another reason for the dramatic growth in mobile, with 75% expecting to shop via their smartphone.”
But it wasn’t just traffic that increased during this period. There were increases of 26% in time spent on sites alongside a huge decrease in bounce rate of nearly 15% over the two day period, according to SimilarWeb. This indicates an improved customer experience, where a greater percentage of visits result in sales.
Personalization also becomes a big trend for retailers, according to Salesforce. Their 2017 research found that while just 5% of shoppers clicked or tapped on a personalized product recommendation, they accounted for 28% of all revenue — making them some of the most profitable customers for retailers.
Impact on Banking
So, what does the holiday shopping season have to do with banking? First of all, it shows the increasing movement from physical stores to digital engagement. For years, consumers felt that the only way to purchase anything other than electronics was in a store, where apparel could be seen, felt and tried on. This is no longer the case. Between very liberal online return policies and the ease of shopping and purchasing, consumers of all ages are shopping online.
More important, however, is the significant shift from online to mobile shopping and purchasing. An increasing percentage of consumers are moving to their smartphones to fill their shopping carts. In some cases, doing so en route to the store so they can get immediate gratification. This shift has occurred as a direct result of the investment retailers have made in the mobile channel and in simplifying the shopping and buying process.
A consumer can now do the vast amount of their shopping on a mobile device at home, in a car, in a restaurant or walking down a street. In all of these cases, the consumer can complete the purchase with a mobile payment, by entering a card number, using PayPal or any other digital payment option. In other words, the consumer is becoming increasingly comfortable with mobile processes that make their life easier.
The consumer is looking for the same experience with their banking relationships. They no longer will accept multiple steps to check a balance, make a payment, transfer money or open a new account. They will reward the “Amazon of Banking” or the “Google of Banking” and penalize those organizations that are not investing in making shopping for and buying a financial service easier.
Keeping Up with Industry Leaders
As we have covered several times in the past year, financial institutions are working hard to increase mobile banking engagement. Despite the use of mobile banking overall experiencing a plateau in usage, the leaders in the industry are continuously improving their offering and investing in new mobile banking solutions. They are being rewarded with higher satisfaction ratings and market leading account growth.
According to the BI Intelligence’s Mobile Banking Competitive Edge study, Bank of America tripled its 2015 mobile banking budget in 2016, and maintained it through 2017. “Cutting-edge banking services are ‘table-stakes’ to attract and retain customers,” Michelle Moore, Head of Digital at Bank of America told BI Intelligence.
The BI Intelligence Mobile Banking Competitive Edge Report identifies which mobile banking and emerging features are most important to consumers when choosing a bank. They evaluated and ranked the largest 15 banks and credit unions in the US as to whether they offer what consumers want with their mobile banking relationship.
Here are some of the findings of the study:
- Wells Fargo was considered the leading pacesetter financial organization, followed by USAA closely behind. The report found Bank of America and Citi being tied for third, with Capital One being in fifth position.
- Mobile transfers, such as account-to-account, bank-to-bank, P2P, bill pay and international transfers were the most in-demand mobile features when consumers select a financial institution.
- Consumers still rate security and privacy features very high in response to the significant hacks and breaches that have dominated the news. Gen X consumers also value mobile ATM functionality according to the report.
- BI Intelligence believes advanced mobile functionality such as biometrics, account aggregation, etc. are set for growth in the future, with mobile wallets also increasing in importance.
- While voice-driven digital assistants were not yet scored high by consumers, it is believed this may partially be caused by the lack of support by most financial organizations at this time. As more solutions hit the marketplace, and with consumers buying devices in staggering numbers, demand for voice-first solutions will be staged for growth.
The Mobile Banking Imperative for 2018
The holiday shopping season is the most dramatic example yet of the changing behavior of U.S. (and global) consumers. Now more than ever, consumers are making their smartphone their go-to option to save time and money. They expect their mobile experience to be seamless and to anticipate their needs. If they leave a process without completing it, they expect to be able to restart their process where they left off … on any channel they desire.
It is no longer enough to just provide the basics of mobile banking. Instead, organizations of all sizes must invest in updated functionality and new ways to improve the customer experience. The market for mobile services is expanding faster than ever, as illustrated by the recent retail results. Banks and credit unions must prepare for this market expansion.