There is no argument that online banking, mobile banking and digital marketing are becoming more important every day, as the consumer gets more comfortable with new technology. That said, there are several activities that remain branch-centric, according to PwC’s 2018 Digital Banking Survey.
Approximately 60% of individuals still use physical branches as the primary point of contact to open a new checking or savings account, or apply for a loan. However, the question becomes, how much of this is driven by choice and how much of it is created by a lagging functionality in digital onboarding and product offerings?
Although mobile channel usage has accelerated, it has largely been driven by surface level interactions – checking account balance and transaction monitoring does not necessarily deepen the bank-customer relationship. Ensuring that digital strategies have the functionality to build and establish an advice-based approach, however, is one step that can help digital channels emerge to further enhance customer loyalty and growth.
Digital channels can assist in educating consumers on what bank services would be most relevant to them in order to accomplish their goals, such as automated savings or specific targets. To date, these services have largely been underutilized for such purposes, as they may not be properly personalized or consider the consumer’s full financial makeup. Banking platforms that provide holistic advice in a digital or mobile framework is a natural evolution of this channel.
The deepening of the digital relationship not only helps to endear a banking institution to its customers, but typically provides an economic benefit to the bank itself through efficiency improvement. Deeper digital offerings could accelerate the bank’s status as the primary channel for initial customer interaction and onboarding, relegating branches to a service-based model.
A Hybrid Approach to Onboarding
In a world where a hybrid model combining physical infrastructure with digital interaction is showing success in other industries such as retail commerce, can banks adopt a holistic and hybrid approach to customer outreach? The challenges that present themselves in developing a hybrid approach are widespread and include how to effectively drive sales (deposit account openings, loan applications, etc.) towards digital channels, the most effective ways to utilize branch channels to assist consumer use of digital tools, and how to manage the onboarding and know-your-customer (KYC) processes, as discussed in a recent PwC Digital Intelligence newsletter.
Consumers who begin, but do not complete applications online often do not receive follow-up communication from financial institutions. In contrast to the retail industry, where many precedent examples of physical to digital transition exist, banks have arguably been slower to offer a true omnichannel experience combining physical and digital support.
Many retail companies use partially completed checkout forms or abandoned shopping carts as a basis for physical store follow-up to increase engagement, provide personalized outreach, and ultimately increase sales. This does not mean that the entire process starts over, however.
It is a frustrating experience if a consumer wants to complete an application or account opening at a branch after beginning the process online, only to result in duplicative work. Digital channels should likely be managed as a gateway for the establishment of a single relationship that can seamlessly cross digital and physical channels.
The Role of Branches in Onboarding
As mentioned, roughly 60% of retail customers still prefer to open deposit and loan accounts in a branch and 65% view branches as a prerequisite for a relationship. Further, this is across customer demographic including Millennials and the Gen-X segment. It seems likely this is due to two primary reasons: 1) digital offerings have failed to expand their ‘use case’ beyond basic day-to-day account balance monitoring, and 2) a lack of familiarity with and/or functionality limitations are inhibiting their effectiveness.
As online and mobile-based features are added, it is significantly more likely that under-utilization of such features would be due to the latter. In order to try to increase the pace of digital sales that better represent the expanded capabilities at a bank and drive customer satisfaction higher, banks may seek to utilize branches as a relationship servicing center for their digital channels rather than as a primary point of initial contact.
The Role of Remote Identity Capture
Onboarding tools and meeting expanding customer expectations are essential for satisfaction, yet remain a challenge. Similar to how banks introduced mobile check deposit, a method to upload identification documents through mobile devices and cameras will improve the overall experience and speed of the know your customer (KYC) process.
Still, full completion of the KYC process, which involves not only identity verification but also the “nature and purpose” of customer accounts due to customer due diligence (CDD), is often cited as the main reason a bank may require a customer to complete an application process in a branch or with submission of physical documentation even if the application began online.
Banks that are starting to differentiate themselves with end-to-end digital onboarding, using these offerings to leverage image capture, biometrics, and advanced data-based validation, thereby enabling consumers to verify their identity remotely. With the effective customer-focused integration of both digital and physical channels, both the financial institution and consumer can benefit.