The Rise Of The Unknown Channel

Many observers are commenting on the American Bankers Association’s recent press release heralding consumers’ preference for the online channel as the preferred channel to do their banking. Here’s the data:


Personally, I’m intrigued by another aspect of the study: What the hell is the unknown channel and why has its popularity as the preferred channel more than quadrupled in the past two years?

In 2007, just 5% of consumers called the unknown channel their preferred channel. Today, that percentage has skyrocketed to nearly one in four consumers, making the unknown channel the second most preferred channel, ahead of  branches and the ATM.

What’s amazing about this, is that as far as I can tell (and I research this stuff), this has happened without banks investing a single dollar in this channel.

A little more seriously, though, the data from the ABA needs more scrutiny.

Among respondents over the age of 55, preference for online banking has actually decreased from 15% to 11% in 2009 from 2008. Among the 35-54 year olds, preference for online banking was flat between 2008 and 2009 at 26%. Which means that what’s pushing the online channel ahead of the others as the preferred channel are the 18-34 year olds. Among these consumers, preference for the online channel jumped from 25% to 38%.

The ABA press release also says that “consumers over 55 still prefer to visit their local branch (26 percent).” That’s not quite right. Preference for the unknown channel increased from 10% in 2008 to 32% in 2009. Not trying to insult anyone here, but can you say “senior moment”?

The final surprise involves the mobile channel. I can’t begin to tell you how many technology vendors tell me how important the mobile channel is, and how young consumers do “all their banking on their cell phone”.

The ABA survey sure doesn’t support this contention. Just 1% of 18-34 year olds called mobile their preferred channel, while no one in the older age segments mentioned it. Interestingly, in 2008 2% of 35-54 year olds said they preferred the mobile channel. Not sure what happened between then and now.

Anyway, there are two clear takeaways for me: 1) banks need to re-rationalize their branch investments, and 2) I’m going to start a company that focuses on helping banks build out their capabilities in the unknown channel.

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