The third installment of this blog’s banking report series looks at the impact and trajectory of what PwC calls the omni-digital age. Whereas the EY authors took a high-level survey of global banking in 2017 and Accenture’s report a tighter evaluation of technology’s place within the industry, this piece is primarily concerned with evolving consumer behavior and preferences and, in turn, banking operating models. PwC partners Catherine Zhou and Ashish Jain relayed the report’s findings in a Q&A format, and highlights from both the data collected and their recommendations to banks are as follows:
Consumer behavior continues to shift rapidly:
- Forty-six percent of consumers are omni-digital only, up from 27 percent in 2012
- Since 81 percent of consumers now own a smartphone, 60 percent now report using mobile banking in some way, up from 36 percent in 2012
- Omni-channel (physical and digital) behavior fell from 57 percent in 2012 to 45 percent in 2017
- Human-only channels continue to shrink, falling from 15 to 10 percent during the same period
Bank branches aren’t exactly dead, however:
- Sixty-two percent of respondents said local branches are important
- Half said they’d prefer to open a deposit account or apply for a loan in person
- Twenty-five percent said they wouldn’t open an account with a bank that didn’t have a local branch
Demographics play a role in these changes:
- The greatest adoption of mobile banking takes place within the 18 to 24-year-old bracket, with 82 percent preferring the channel
- In contrast, only 29 percent of the 65+ bracket uses mobile banking
- A channel’s usage rate can vary from 40 to 80 percent of a cohort based on income level
Banks need to adapt and adjust their operating models and product offerings by:
- Reducing their branch count
- An in-branch transaction strategy is not only expensive to operate but not what the market fundamentally wants anymore.
- Selling products where people want to buy them
- With just 25 percent of products available online, banks need to start building relationships by delivering value where customers exist and stop asking them to take a break in their busy day to visit a branch.
- Making products easy to use
- Lengthy, tedious application processes repel potential customers and clunky, outdated security procedures disengage current ones.
- Selling what people want to buy
- Customers, particularly Millennials, are skeptical of being sold products they don’t need or want, believing that banks only look out for themselves. To combat this perception, conversations should be tailored and products personalized, ensuring relationship managers make the most positive impact possible.
- Engaging customers much, much sooner
- Because customers make 2 out of 3 complex financial decisions before visiting a provider’s website, banks must engage prospects much further upstream, appealing to their daily likes and activities. This can occur by collecting and mining proprietary or third-party consumer data, relying on those analytics to better understand what each individual is looking for at each stage of their financial journey.
No doubt this final point opens the door to a popular and powerful topic within banking circles—artificial intelligence—as it’s widely seen as a, if not the, solution to much of banking’s personalization and cross-selling conundrum, something Seismic will reveal further next Tuesday. It’s also appropriate that PwC’s Q&A ends here, in a manner and voice that’s nothing if not aphoristic: When you get better at adapting, you’ll be more likely to come out on top when attitudes and behaviors change again. Because one thing is certain, they will change.
Funny. That sounds familiar.
