According to the 2018 J.D. Power Retail Banking Satisfaction Study, there is increasing growth of digital-only banking customers, but many of these consumers are less satisfied than their multi-channel and branch-only counterparts. According to the J.D. Power, 28% of retail banking consumers are now digital-only, but they are the least satisfied among all customer segments examined in the study.
The study found that customers who exclusively used a branch are slightly more satisfied than the digital-only consumer, but that the most satisfied segment were those consumers who used both the branch and only/mobile banking frequently (2+ visits over the past three months). This group is followed by ‘digital-centric’ branch-using customers, who used the branch once in the past three months and but used online or mobile banking more frequently.
These findings are not, by themselves, a validation for keeping branches open as much as a sign that many banking organizations are not doing an adequate job of providing a positive digital banking experience for the increasingly demanding digital consumer. These findings also support the benefits of branch transformation efforts that serve the needs of both digital and branch-centric consumers.
“There is no doubt that digital banking channels give banks an enormous opportunity to reduce costs, but the risk is that those cost savings come with lower levels of customer engagement,” said Paul McAdam, Senior Director of the Banking Practice at J.D. Power. “Right now, retail banks need to address the growing digital divide that is emerging within customer segments. Successfully navigating that transition will require banks to provide better, more personalized advice that is consistent across both digital and branch interactions and to ensure that customer needs are met, regardless of channel.”
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Digital Account Opening and Communication are Key
The J.D. Power satisfaction study found that the lower satisfaction scores found among digital-only customers are largely driven by weaker performance across three factors in the study: communication and advice; products and fees; and new account opening. For the most part, these areas are some of the easiest for financial organizations to correct, using AI tools to provide spending and saving insights, having complete transparency and digital shopping tools and providing end-to-end digital account opening.
That is why the chart below can be deceptive at first glance. While the satisfaction by channel would initially indicate that all accounts should be opened in the branch (where satisfaction is highest), it actually supports the contention that organizations are doing a terrible job of supporting online and mobile account opening processes. Most lack simplicity and force a consumer to go to a branch.
The chart also supports the reality that last touch attribution of account opening gives the branch opening category far more credit that in reality, where many consumers start the account opening digitally, yet complete the process in a branch.
These trends also illustrate the importance of improving the customer experience from the moment the consumer opens a new account or expands a relationship. This includes both branch-based and digital account openings. Developing a robust new customer onboarding process continues to be the foundation of this strategy.
Expanding on the insights contained in the 78-page ‘2017 Account Opening and Onboarding Benchmarking Study‘, here are some important ways to improve the results of your current or new onboarding process.
Quick Follow-Up Improves Satisfaction
According to the Guide to Multichannel Onboarding in Banking report, “One of the key missions with an onboarding process is to get out of the starting blocks as quickly as possible so the customer realizes you appreciate their business.” While a great deal of insight can be collected as part of the new account opening process, it is usually difficult to leverage this insight in the first few days after account opening due to back office processes. The key is to balance what data can be used, with the importance of reaching the new customer as soon as possible.
Some institutions may only have access to the name of the customer or member, address and type of account opened initially. If this is the case, the potential to use a personalized note – handwritten and sent to the customer the same day they opened the account – may be the only option.
If your systems enable you to use insights such as a cell phone number or email address immediately, the impact of sending a simple SMS text or email a few minutes after the new customer leaves the office to thank them for their business is very impactful.
As shown below, the impact on customer satisfaction between reaching the new customer within 3 days is significant. In addition, the benefit of having the initial communication come from the same person who opened the account is also high. With digital technology, this level of ‘personalization’ can be automated but is still important.
With regard to marketing channel used, the benefit of an email or SMS is both speed and the ability to provide an embedded link to a personalized new customer introduction microsite or even a personalized welcome video (built for mobile consumption). This is where the use of account type data and even opening balance can be effective.
The objective of this immediate communication is to thank the customer as quickly and as personally as possible using the customer’s name, the type of account opened and what the customer may expect next. Imagine this as the combination of account opening ‘receipt’ combined with personalized ‘thank you.’
As you can see below, the channel used for the first communication does matter. What is interesting, the easiest and most immediate form of communication (SMS text) is both the most impactful on satisfaction and also the least used. While the impact and use of email and direct mail were very similar, the power of the phone call can’t be underestimated.
Most importantly, doing nothing is not an option. Consumer satisfaction drops precipitously if no follow-up communication is received. Which brings up an important point – if the new customer does not notice, open or realize you have sent them a follow-up, it is worthless. This reinforces the power of the SMS text and phone call.
The Importance of Account Opening Confirmation
Possibly because of the impact of the Wells Fargo cross-sell debacle, consumers are increasingly demanding of a confirmation of account opening according to J.D. Power. For some organizations, there has been a movement to a digital ‘receipt’ showing the accounts opened as well as the amount deposited (or borrowed).
In addition, there is a listing of all other accounts that were opened during the branch-based or digital account opening process. This would include the service type (debit card, credit card, mobile banking, bill-pay, etc. as well as any value to these services (credit line, maximum withdrawal limit, etc.). This provides the consumer with a record of what occurred in the new account opening process.
This ‘receipt’ may best be done via email or SMS text, where the consumer engages with the bank or credit union by opening the communication. This also provides a way for the financial institution to note services not opened that the consumer may benefit from. Listing ‘services not opened’ reminds the consumer of opportunities not taken advantage of.
As shown below, the ability to provide a digital receipt of acount opening could be a significant differentiator today, since less than 10% of organizations currently offer this level of transparency.
Go Beyond a Single ‘Touch’
An ongoing misconception by financial institutions is that customers don’t want to get a lot of messages after opening a new account. As has been shown by previous J.D. Power & Associates studies, customer satisfaction and cross-sell success both improve as the number of contacts are increased up to 5-6 times, and is still effective if the customer is communicated with as many as seven or more times.
Despite the impact of multiple communications, the majority of consumers still did not recall being contacted by their financial institution, with only one in five indicating their bank or credit union connected 1-2 times. This represents lost potential good will, sales and revenue.
What most banks and credit unions also forget is that not every communication sent to the new customer is read or even delivered, even when the organization has done their best to make the communication both personalized and relevant. Therefore, the optimal number of messages scheduled could be even higher than the 2015 J.D. Power study suggests.
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Know Me, Look Out for Me, Reward Me
Of all of the ways to improve the overall onboarding process, the Digital Banking Report and J.D. Power found that the most important driver of enhanced customer satisfaction is applying customer-level insight to customer communications. Beyond simple name and account type data, the communication should reflect the actions each consumer has taken and the insight that has been shared during the onboarding period.
The goal is to mine the customer insight to generate automated needs-based messages that are consumer (as opposed to profile) specific. This allows real-time adjustment to a customer’s profile based on purchase behavior, remembering the importance of ‘engagement before selling.’
Just as important as remembering the demographics and product ownership of the customer, it is important to build a communication channel strategy for each customer based on the channels they use and respond to the best. By leveraging data from all sources, content can be developed based on needs, channels and devices.
As opposed to moving immediately to cross-selling new services, the majority of early communication should focus on logical ‘go with’ services, such as direct deposit, bill pay, alert notifications, online and mobile banking, mobile deposit capture, loyalty/rewards program and actual usage of the account. Once trust is established with highly personalized communication, the relationship can be expanded using additional insight captured.
The onboarding process should include traditional communication channels, such as direct mail, email, statement inserts, etc. as well as other channels such as SMS messaging/alerts, ATM messaging, social media, call center, etc.
Onboarding Increases Revenues and Decreases Costs
As stated in the ‘2017 Account Opening and Onboarding Benchmarking Study‘ the negative impact of a lost customer is at least $400 based on the sunk cost of acquisition and the revenue potential of a new customer. With attrition rates of new customers still hovering between 25% and 40% at most institutions, the financial cost of lost customers is staggering.
As we look at the recent findings from J.D. Power and Associates, we get an even clearer picture of the value of satisfaction improvement that can be achieved early in the customer’s relationship. According to J.D. Power, improving customer satisfaction by as little as 50 points can equate to a $24 million increase in revenue per 500,000 customers. Put differently, a 50 point increase in satisfaction per customer can equate to a 6% increase in revenue.
Onboarding is not only the best way to establish a great first impression, but one of the most economical (and impactful) ways to impact satisfaction. Despite this close to zero risk strategy, we continue to find that only 50% of organizations have an onboarding process in place and even fewer reach the consumer the optimal number of times.
Would you work with an organization that didn’t go out of their way to say ‘thank you’?