New research conducted by our parent company, MMR Research Associates, found that roughly two-thirds of consumers expect to increase their reliance on digital banking following the pandemic. Such a shift will have a profound impact on how institutions interact with customers, and the potential for bottom-line impact is staggering.
Even before the outbreak of COVID-19, financial services projections and trends were widely documented. New generations, in particular, have changed the parameters of the traditional banking-customer relationship.
There is no single one-size-fits-all solution or approach institutions should consider as they navigate the changing landscape. But, it’s essential to recognize the changes and plan accordingly.
The new survey data clearly shows more people are willing to go digital with their banking experience. They just needed the extra push to do so, and COVID-19 gave them that reason. Moving forward, banks should look at how they can expand and enhance their digital offerings without sacrificing the customer experience.
The COVID-19 Shift
While some branch visits have continued during the COVID-19 pandemic, a majority have involved ATM transactions than interactions with bank tellers. Perhaps unsurprisingly, the use of digital banking has increased during COVID-19, along with monitoring accounts for fraud.
Even during COVID-19-imposed restrictions, 24 percent of respondents to our survey said they have visited a bank and used the ATM (including 33 percent of those who usually visit a bank). Furthermore, 14 percent said they visited a bank and interacted with a bank representative or a teller (including 23 percent of those who ordinarily visit a bank).
But, the survey of 1,004 total respondents found a clear shift to digital banking during the outbreak. More than four in 10 (41 percent) of those who typically visit or call a bank said they have used their bank’s website or its mobile app.
The survey also found 33 percent of those who usually visit a bank plan to use manual online bill pay during the pandemic, while 29 percent said they plan to use online check deposits.
Additionally, 24 percent said they will take advantage of online chat functionality to talk with a bank representative, while 20 percent will use a digital offering to submit documents for verification.
The Landscape
The widely held adage that “the customer is always right” has taken on new meaning. Today, “making it right” for customers often serves as a catalyst for driving meaningful service innovations that put customers in the driver’s seat of their own banking experience.
As an example of this shift, consider the approach that millennials take when it comes to banking. A few years ago, one in three millennials said they were open to switching banks in the next 90 days, according to The Millennial Disruption Index from Viacom Media Networks. The same survey found that more than half (53 percent) don’t think their bank offers anything different than other institutions.
With the swing to more customer-driven relationships, financial institutions want to explore what consumers think, how they feel about their experience, and what action — or actions — they are likely to take. Customer engagement has moved from traditionally transactional (bank-to-customer) to typically transformational (customer-led within the guardrails set up by the bank).
Even before the COVID-19 pandemic, customers could decide how, when, and where they engage in banking. Many of the customers who wanted an in-person interaction with their bank have a taste of the digital experience, and they may not return to visiting a physical location.
After the pandemic subsides, nearly one in three customers (30 percent) who regularly visit a bank plan to use online options to manually pay bills, while almost half (49 percent) plan to use online offerings to check account balances, our research shows. Just one-third of respondents who typically visit a bank say they foresee no change in their banking habits.
Trends for Traction
As the world steps into the future normal that will evolve from the pandemic, banks will need to evaluate what service offerings should look like to succeed. Consider these seven critical influencers to this relationship that drive business impact.
Messaging. What benefits and claims will resonate and should take the lead in messaging across various financial products?
Product Optimization. What fees and rates are consumers willing to pay to enjoy certain features and benefits?
Seamless Experience. How is the bank ensuring a replicable, consistent experience across all touchpoints, including in-person and online?
Flexibility. How is the bank leveraging the stickiness of checking accounts — the only service nearly universal among customers — to build customer connection?
Loyalty. How is the institution using the power of its incumbent status to reward customers based on tenure? How is it making its offerings indispensable for customers?
Mobile. What practical, high functioning, highly personalized mobile features are customers using, and which ones do they want to see?
Partnerships. With whom is the bank partnering to make transactions straightforward and rewarding?
Most banks offer the same or similar technology, generally leaving something less tangible (but perhaps more profound) — relationships — as the ultimate differentiator.
Mitigating Risk
Strategic decisions benefit from direct input from those who will use or be affected by their products, especially as the world emerges into the “future normal” following COVID-19.
There are steps organizations can take from a messaging and communication standpoint to help “soften the blow” of changes. By asking customers directly what matters to them, that messaging can be personalized for a given group of users.
Getting out into the field when it is safe to do so is a great way to take the pulse of the market and see how opinions have shifted. Visit your competitors, use their products, and see what the experience is like. Then try yours, and assess it honestly. Is there a gap?
After auditing the experience and resolving to act where improvement is needed, organizations can more easily find ways to close the gap. Then, they should take steps to review what they learned from this business interruption, so they are prepared for the next one.