The omnichannel banking consumer is dying — and being replaced by the mobile-first consumer.
That’s one of several key takeaways from this year’s massive survey of banking customers recently released by PwC. The consulting firm annually polls some 4,000 financial services customers on a wide range of subjects to better understand their preferences and needs. In last year’s survey, PwC described the emergence of so-called omnichannel consumers: those who care less about which digital platform they do their banking on than about their ability to bank digitally somehow.
That has changed in just one year, according to PwC’s David Schiff, Ashish Jain, Scott Evoy, and Greta Lovenheim Capps, who led the research. “We see that a clear preference has been forming, and the smartphone won the contest,” they say in the survey’s report.
Last year, only 10 percent of consumers were mobile-dominant, while 25 percent were PC-dominant; this year, those numbers are 15 percent and 20 percent, respectively, suggesting a clear trend that is likely to continue.
Therefore, banks and credit unions that are taking a platform-agnostic approach as they build out their digital services should rethink it, the PwC report suggests. The best strategy is a mobile-first strategy.
“Many firms are focusing on platform convergence,” the researchers say. “In our view, you’ll be better off designing for the mobile experience first, because that’s where your most valuable users are headed now. We’re not saying you should abandon browser-based tools or branches. But for many firms, the priority is in the wrong place.” They add: “In fact, when developing strategy, we encourage banks to think mobile first, or else.”
When Choosing a Bank, Consumers Value Service, Convenience
While a mobile-first approach is a requirement for banks as they build their digital brands, consumers still place a premium on traditional banking values: convenient branch locations and positive in-person banking experiences, PwC found.
In fact, 65 percent of respondents said a local branch is important to them when considering where to bank, and 25 percent said they won’t even consider a bank that doesn’t have a branch near them.
“When picking a primary bank, survey-takers across all age groups particularly value attributes like convenient in-person banking, referrals from family or friends, or a positive previous experience,” the researchers say.
That’s good news for community banks and credit unions that struggle to compete with national brands strictly on providing the most advanced digital experiences. It does not, however, mean that small banks can simply ignore the urgent need to modernize those experiences.
Branches Still Matter in a Mobile Banking World
Even as mobile banking grows in prevalence, one reason consumers continue to value convenient bank branches is that there are still certain kinds of financial transactions that consumers simply prefer to do in person.
Almost 60 percent of consumers prefer to apply for loans and open new checking or savings accounts in person. And substantial majorities still prefer branches for opening a new brokerage or investment account (43 percent) or using financial advisory services (37 percent).
Yet with physical branches a significant cost center for banks, they should still work hard to understand how to meet customers’ needs online even for these more complex services, according to PwC. More consumers straddle the physical and digital worlds, performing some aspects of a single transaction online and other aspects in person.
“The most successful firms combine digital advice with face-to-face advice,” the researchers say. “It’s a hybrid approach; not an either/or. That means getting great at handoffs from branches to service centers. It also means tying that advice to digital channels seamlessly, so customers can see how the advice they’re getting fits with their goals, and how they’re making progress toward those goals.”
Most Consumers Are Less Engaged with Banks, Yet Need More Help
One paradox of the PwC findings is that while people are engaging less frequently with financial institutions on most channels, they seem to need as much help or more from them, especially when it comes to long-term financial planning.
For example, while most consumers engaged with their banks online, at an ATM or at a branch at least monthly in 2012, when PwC began surveying consumers, the frequency of those engagements has been declining. Today, most consumers engage monthly or a few times a year on each of those channels. Mobile banking engagements are now the most frequent, with many consumers checking in on their phones several times a month.
Yet the researchers note that engagement frequency is not a perfect barometer of digital effectiveness. In fact, it may be that many banks’ user experiences have improved enough that customers don’t need to check in as often.
At the same time, consumers are in need of trusted advice. Across generations, they told researchers that they’re focused on the long term, with saving for retirement as the top financial goal cited by baby boomers, millennials and those in between. Banks need to make better use of the data they have on their own customers to begin to develop services they need and marketing strategies that work. That’s especially important now, as a raft of digital-native fintech firms arise to compete with traditional brands on a full range of complex investment products and services.
“Many banks have access to an astonishing amount of information about their customers: What they need, what they want, and what might make them defect to a secondary institution,” according to the PwC report. “This is what leading digital competitors in other industries do. If banks don’t do this, we believe their competitors will.”