It goes without saying that the branch experience has changed drastically over the past century and even more so with significant advances in technology in just the last decade. With walk-in traffic electing to embrace home and mobile banking options, several leading banks are directing their focus and attention on investments that improve the digital experience to complement, not compete with, emerging consumer preferences. Despite the recent trends, we still see opportunity for branches to thrive alongside these non-traditional banking channels in the near-term and long-term.
Banks don’t feel confident about their ability to innovate, even though they say technology and innovation will be the biggest success factor in the future.
Senior bank executives across the world view technology as the biggest cause of transformation to the industry in the near future, according to a PwC study released earlier this month called “Retail Banking 2020: Evolution or Revolution.” Technological advances was the most popular choice among the executives in the survey as one of the global trends that will disrupt banking in the next five years, with 86% of respondents citing it as one of their top three trends.
When I moved to Seattle, Starbucks had just four locations. So I’ve had a ring-side seat in their climb to worldwide ubiquity. Though not a huge fan of their coffee, I greatly admire their business model, technology, and payments innovations.
I have been paying with the Starbucks mobile app for the past few months (note 1) as have 14% of its customers. It’s great as long as there is a queue. That gives you plenty of time to go through the 9-step mobile payments process (10 steps with tipping):
Building on yesterday’s debate about Google and co coming into banking, and the previous discussions of such:
… and there’s been loads more, I was shocked to stumble across a survey this week that shows the attitude of Millennials (people born from the 1980s to 2000 that grew up with the internet).
The survey is called the Millennial Disruption Index (MDI), and represents a three year effort by Scratch, a creative agency. Scratch interviewed over 10,000 Millennials in America, and asked for their views about 73 businesses in 15 industries. The results are astounding, finding the most likely industry seen for disruption is Banking.
There are two popular misconceptions that are legacy from last decade: customer relationships and customer demographics. These do not apply to Digital Banks, but incumbent banks still use them.
On the relationship side, most banks talk about relationship banking. They want to have a relationship with the customer. They need to engage the customer in a great customer experience and all that. It’s all very needy or worthy, dependent upon your view, but again it is misguided.
The key thing here is that I’ve heard this relationship thing for a long time too. It started when banks started discussing share of wallet and lifetime financial management. The whole idea is that the longer you could keep a customer and cross-sell to them, the greater the share of wallet you got and hence the more profitable you became.
Times are changing, and today’s digital world is having widespread effects on an array of consumer behaviors, including how we handle our finances. Electronics and mobility are key trends for financial institutions to keep track of, but consumers aren’t ready to sever all ties with their local bank branches just yet.
According to Nielsen data from a custom study conducted in November 2013, the vast majority of U.S. consumers (82%) have entered the digital arena, stating that they banked online at least once in the last 30 days. The high percentage speaks to the prevalence of the digital world in consumers’ lives, especially when compared against the 68 percent of people who said they had visited a physical branch in the same period.
A few months ago I joined the wearable technology community by purchasing the Pebble smartwatch, a darling of Kickstarter crowd funding, the Pebble raised $80 million, the most successful Kickstarter project to date.
At first I felt a little geekish wearing the shiny black device, but as I started to master what it could do, and how to tailor my notifications to suit me I was quite impressed.