Big Study Examines Retail Banking Channel Preferences

Cisco has released findings from a broad, multi-channel study, gauging consumer preferences for branches, mobile, video and social.

Released through its Internet Business Solutions Group, Cisco’s survey encompassed some 5,300 retail banking consumers across eight developed- and emerging countries: US, UK, Canada, Germany, France, Brazil, China and Mexico.

Appetite for Banking in Social Channels

According to Cisco, the death of the branch has been greatly exaggerated. In the study, the most avid adopters of virtual channels — tech-savvy consumers — are also among the most frequent branch visitors.

Cisco tested nine different potential future banking concepts to gauge consumer interest. Two showed the greatest potential. One was a brick-and-mortar specialty branch, the other was a purely virtual branch. Possible specialty services for an offline branch include financial education, notary services, tax preparation, various insurance products and realty services.

38% of respondents in North America expressed a high degree of interest in the virtual banking concept. According to the participants in Cisco’s study, the main obstacles that might prevent consumers to adopt a purely virtual branch include concerns about security of information (24%), the lack of a personal touch (21%), and potential difficulties using all-online channels to resolve customer service issues (16%).

22% of respondents said they would switch financial institutions rather than adopt all-virtual channels if their bank eliminated branches.

Appetite for Banking in Social Channels

An overwhelming number of customers are reluctant to mix banking with social activities. Only 1% of consumers in developed countries and 8% in emerging markets indicated an interest in using social channels to conduct banking transactions. A key reason for their reluctance is concern about privacy and lack of control over personal information.

However, one in every two consumers expressed a high degree of interest in using social platforms (presumably Facebook) for person-to-person payments. 31% were intrigued by the idea of banks analyzing one’s social network as a factor in determining credit worthiness.

Mobile to Become the Dominant Channel

Cisco predicts that by 2014, mobile will overtake desktop computers as the primary access point in banking. The segment most strongly in favor of mobile banking is younger customers, with an average age of 33. While these respondents clearly have a preference for mobile banking, it’s important to note that they do not want it to replace other channels. They visit branches 2.6 times a month on average, compared to 2.3 times across all respondents, and are very supportive of using multiple services in an omnichannel environment.

The most interesting mobility features, according to respondents, are real-time expense tracking and money management (22%), remote deposit by taking a picture of a check (21%), and using the mobile phone as a payment mechanism (18%).

Video Banking

Consumers expressed interest in the ability to interact with their banker via video — 47% in developed countries and 78% in emerging markets. 23% of consumers in developed countries and 43% in emerging markets saw the use of video conferencing with remote experts as a way to enhance the quality of advice in situations where access to quality expertise is a concern.

BMO has deployed a video banking solution (provided by Cisco) in 120 of its Canadian branches. RBS Citizens is testing a similar system in 17 of its branches. BofA has been toying with the technology in experimental concept stores since around 2010.

Data Banks

Significant concerns about privacy, security, and identity theft were prevalent among all consumers, and not just limited to banking. Cisco suggests banks could play a new role in the digital age, acting as infomediaries — a trusted steward of consumers’ online personal information (i.e., a secure data bank). 42% of consumers consider banks to be best qualified to act as stewards over their digital information, ahead of the government (19%), telcos (6%), and social media sites (4%).

9 Possible Future Banking Concepts

An important component of Cisco IBSG’s research was the testing of several innovative concepts with survey participants. Understanding participants’ views about these concepts will help banks determine the types of solutions that will work best for their specific business models.

Virtual Banking – With this concept, banks no longer have physical branches. Cash transactions are conducted exclusively using ATMs. Customers meet with their bankers or investment advisers using video over the Internet. Bankers share relevant financial information using their computer screens, and forms are signed digitally.

Specialty Branch – This concept transforms the branch into a “one-stop shop” by offering a broad range of services, including tax preparation, legal advice, or insurance policies. Specialty branches could also include cafés for meeting with friends and colleagues, events for local customers, and video-conferencing suites.

Streamlined Branch – This concept is a slimmed-down branch. It includes fewer employees, several ATMs, and no traditional tellers. Streamlined branches are similar to self-service kiosks currently being used by airlines, where employees use tablets to assist customers with their needs. For more complex services, remote specialists are available through two-way video-conferencing kiosks.

Banking Pod – This concept is a small booth that includes a video screen and ATM, allowing customers to conduct both basic and complex transactions such as ordering checks, opening accounts, and interacting with bank employees. Because they are completely automated, banking pods can be easily located in various locations, such as malls and car dealerships.

Agent Branch – Currently used in emerging countries, this concept is a franchise-like model where an organization such as a post office, convenience store, or retailer offers financial services on behalf of a bank.

Mobile Banking – This concept focuses on delivering as many services as possible on mobile devices such as smartphones and tablets. Mobile banking also takes maximum advantage of personalization and location-based services by using customer information.

Social Media – This concept uses social media sites such as Facebook and Twitter to deliver financial services such as making deposits, transferring money, applying for loans, and opening accounts.

Customer Sensing – This concept uses customer information such as credit card transactions and social media activity (e.g., ‘Likes’ on Facebook) to deliver personalized offers and discounts from third parties.

Digital Footprint Management – This concept takes advantage of the need for customers to manage their digital footprints that are left behind from transactions and interactions on social sites, mobile devices, and online payments. Banks would manage their customers’ digital footprints to alert them about security issues and safely share information to receive personalized offers.

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