According to a recent report from Juniper Research, more than a third of all people who use banking globally will rely on “contactless technology” by 2018. These users are also demanding positive mobile experiences- Capgemini’s 2014 World Retail Banking Report showed that more than 25 percent of countries reported a greater than 10 percent decrease in customer satisfaction. Capgemini explained that banks are failing to realize what customers really want from social media and mobile banking, falling behind on what Gen Y is expecting from businesses. Pew Research reported in August 2013 that 51 percent of US adults, which is 61 percent of all internet users, do their banking online. The study also reported that 32 percent of US adults use their mobile phones for banking needs.
Banks, like many other industries in recent years, have been affected by the evolution of mobile, and many are still struggling to catch up. As the use of mobile devices rises, the demand for mobile access to secure information also increases. Pew reported that 91 percent of US adults confirmed they own a cell phone, and 35 percent of those use their mobile phones for banking transactions. Banks that do not provide a comprehensive digital platform to their customers are missing out on a huge market opportunity, and perhaps losing valuable market share. In 2012, 39 percent of US adults said they would prefer to do their banking online, which was a 3 percent jump from 2010.
Just as the technology, enterprise, news, manufacturing, and other industries have seen intense pressure to establish a presence in a mobile world, banks are beginning to see an expectation from their customers for a more mobile connected banking experience.
The US Federal Reserve reported this year that, according to a survey of US mobile users, 51 percent of all smartphone owners in the US have used mobile banking in the past year, up from 48 percent the year before. The Federal Reserve also found that the most prevalent use of mobile banking among US mobile phone owners was to check account balances and recent transactions, followed by transferring money between an individual’s own accounts. It was also reported that 38 percent of those who use their mobile phones for banking have deposited a check via their mobile phone in the past year.
Banks are bringing more than just an app to their customers- they’re bringing them convenience, which is exactly what consumers say they want. The Federal Reserve further reported that 37 percent of consumers named convenience as the main reason behind their mobile banking adoption. The decision of which bank to use for a consumer could very well hinge upon whether or not they’re digitally accessible. In the digital space, the location of a bank branch becomes secondary when an mobile app with lots of functionality is available. “Location, location, location” is a mantra replaced by “mobile, mobile, mobile” when it comes to bank branches versus banking convenience in the digital world.
When we hear the term “mobile” or “digital strategy,” the first thing that comes to mind is most likely mobile applications. While mobile apps are an efficient tool for engaging and bringing convenience to consumers, and are often also a necessary function, they are not the be all, end all of a digital strategy. Digital strategy encompasses everything from social media to web design to mobile apps. As the banking industry plans to create a relationship with their customers and form a personalized, engaging digital sphere, community bankers have to focus on more than just the app, without letting the app fall behind.
A digital strategy is a delicate balance but a necessary feat, especially for the banking industry. Customers need a secure digital space to transfer funds, pay bills, check balances, and more, and are beginning to expect this from their banks, rather than see it as a value-add.
The main argument for a digital banking industry is simply, convenience. Customers do not want their only option to be a 9-5 teller or a 24-hour ATM. Banks need to widen their lens and break down boundaries between themselves and their customers in order to meet the demand, and digital is quickly becoming the best way to do this. By expanding hours, having online customer service reps available, utilizing a mobile application that can be accessed anywhere/anytime, and creating an easy-to-use, attractive user-interface on all digital fronts, banks can create a personalized, functional digital space that will impress, enable, and retain customers.
A huge competitive advantage of digital strategy is transparency- through the use of social media and websites, banks now have the opportunity to not only offer convenient banking, but to cultivate online relationships with current and potential customers. Banks are traditionally discrete and must cultivate an environment of privacy and security, and while consumer information will always need to be secure and private, collecting data and sharing information has become vital to a bank’s online and digital presence.
Banks will also need to transform a portion of their mindset in order for a digital strategy to work: their customers have to come first. Bankers traditionally have a conservative approach that enforces banking compliance and regulations, and adheres to internal policies and processes, which are some of the most critical parts of a bank’s internal operations. However, in order to keep competitive within a digital world, customers’ needs must reign at the top of a bank’s concerns. Bank executives will need to head this initiative by becoming more involved in strategic customer service and overseeing internal and external digital changes.
While an entire digital strategy is vital, the mobile app for a bank will truly be the crux of their customer service and interactions, and will either make or fracture their customer relationships. Many common errors that any company can make when developing a mobile app could permanently turn off a customer from a bank. For example, forgetting their user and creating an app that is counter-intuitive will create a damaging first impression for a banking customer. Banks need to remember the customer’s journey and experience throughout the app- what features will they need, how easy is it to get that information, how appealing are the buttons and other interfaces, how quickly does the app function- all of these elements will create an atmosphere within the bank’s digital strategy, and a poor experience could lose customers. Applications are not where a bank should cut corners when developing their digital strategy, since customers are making decisions about who to bank with based on convenience and functionality.
Another consideration banks should always keep in mind when developing their mobile applications and digital strategy, is that they should never get complacent- the mobile and digital environment is always evolving, and as well should their strategies and applications. Playing it safe and keeping an outdated app or website the same will turn off users just as quickly as a poorly functioning app. In today’s rapidly changing world, market share can be gained or lost based on non-existent or outdated digital properties.
Customer relationships with banks present a new area of value for the banking industry. Since the financial crisis in 2008-2009, the banking industry has had to look beyond the value of financial leveraging and into the alternative source of value: their customers. With the emergence of a digital strategy, banks have an opportunity to win back their customers and show them that they are more than just assets under management.
In a 2014 report from Accenture that surveyed over 500 senior marketers in 11 countries, including CMOs in the banking industry, 78 percent of those surveyed believe that marketing will undergo a “fundamental change” in the next five years, with analytics, digital and mobile being key drivers. Eighty percent of marketers involved with high-growth companies reported that providing a consistent customer experience across all channels was of the utmost importance. For banks, these findings ring true. In order to provide what their customers are looking for, more money needs to funnel into their digital marketing budget.
Digital banking not only makes banks more relevant to their consumers, but it provides more opportunities for profit. Consumers are looking for a personalized banking experience- custom investments and portfolio options, individualized pricing and segments, all at their fingertips. Customers are also looking for convenience and quality of service, all of which can be improved via an organization-wide digital strategy. Customers are now more likely to switch banks due to inconvenience, rather than products or services offered. The Accenture survey found that 69 percent of high-growth companies consider customer experience their priority investment.
According to an Ernst & Young global banking survey from 2012, customers planning to switch their banks has increased from 7 percent to 12 percent across the globe since 2011, and 44 percent of consumers were using social media as a source for banking information that influenced their decision on who to bank with. 70 percent of respondents said they would provide their bank with more personal information if it meant they’d get greater personalized services. Across the globe, respondents cite internet banking as their most preferred way to bank, with 47 percent saying they prefer the simple transactions online, rather than traveling to a branch.
Banking without boundaries is not an easy transition to make, but in order to keep customers, acquire new ones, as well as stay competitive in a shifting market, it’s a necessary customer-centric, market-driven move.
Not all banks are falling behind in the digital movement- some got the memo and have used digital and mobile strategies to their advantage, getting an edge on the competition.
TD Bank in Canada had a video go viral on YouTube, a website with a largely 18 to 34-year-old audience, one of the hardest markets for banks to reach. The almost four-minute video has over 10 million views, and went viral within two weeks of being posted. The video depicts customers reacting emotionally to receiving surprise gifts through an ATM machine. The reactions from the customers are visceral and can be felt through the video- something that led to its virality. The bank experienced a surge in customer queries to join the bank after watching the video, and the entire spectacle showcases why digital marketing is so important to banks that are trying to reach out to millennials and baby boomers alike.
In another shining example of taking their digital strategy to another level, Westpac New Zealand bank has integrated augmented reality into their mobile app, bringing customer convenience to new heights. When the Westpac app is downloaded, customers register their cards and activate their account. From there, users only have to slide their card under their phone to activate the camera, in order to pull up 3D bar charts of their balances, transactions, account history, and other information. The app is set up to where one person’s app can only access their info, and no one else’s, even if another card is swiped under their phone. Westpac is the only bank in Australia to offer this technology and one of merely a handful worldwide.
The US is no stranger to mobile banking, however, and U.S. Bank has recently begun testing a new mobile app the uses an iPad’s camera to allow Major League Baseball game attendees to apply for a Minnesota Twins Rewards MasterCard. Overall, U.S. Bank seeks to invest further into photo banking as part of their digital strategy. Users can scan their drivers license under the iPad camera to quickly apply for the credit card, without any additional paperwork, speeding up the application process immensely. Since its implementation in June 2014, the system has been used at 11 Minnesota Twins games. U.S. Bank also allows photo services on their mobile app, such as allowing customers to deposit a check by snapping a picture of it with their smartphone.
While a viral video and augmented reality may not be a realistic goal for every banking business, taking steps toward a comprehensive digital strategy should be. As the mobile world infiltrates every industry, banks will no longer be immune to providing convenient, anytime, anywhere customer service. To stay competitive in an industry built on providing secure services, all banks will need to get on board with their consumers, and start taking the appropriate steps toward a being competitive in the mobile and digital playing field.
Enola Labs provides digital insight and expertise to organizations that realize they have to make the digital shift and need enterprise mobility consulting to do it. Whether its enterprise digital strategy, a mobile or web solution, or a complete business transformation, contact us today and let us partner with you to build your idea and shape your future.