It shouldn’t be hard to convince you that the banking industry has changed dramatically over the past 10 years.
The introduction of smartphones kick-started the mobile banking revolution, the financial crisis brought on a world of regulatory pain, and the emergence of fintech startups threatens to disrupt, displace and, well, “diss” banks altogether.
With the publication of the 2017 Cornerstone Performance Report for Banks, we decided to look at how banks’ operational performance has changed over the past 10 years, as well. The list of metrics that have changed dramatically is long, but we narrowed it to 10 across three channels:
Digital. As a percentage of checking accounts, active online banking users grew 82% and active online bill payers increased 134% between 2007 and 2017. These percentage changes sound impressive, but just 51% of mid-size banks’ checking account holders banked online in 2017, and only 11% paid bills online through their banks. We didn’t capture mobile banking adoption in 2007, but today the median percentage among mid-size banks is 26%—with relatively little variation between those at the 25th percentile (23%) and those at the 75th percentile (33%).
Branch. With the growth in digital banking, it’s no surprise that the number of branch transactions has declined over the past 10 years. But, teller staffing has not kept pace, as the median number of monthly teller transactions declined by 28%. The majority of accounts are still opened in branches, however. That said, monthly new accounts opened per platform full-time equivalent (FTE) employee fell from 48 to 27 over the past 10 years, a 44% decline. That’s simply inexcusable. For years, branchaholics have claimed that branches will become “advice centers.” Maybe platform personnel are advising consumers to apply online.
Contact center. The growth of digital banking also impacted the contact center. As more “simple” activities are handled via self-service, call complexity has increased. The result is a 46% increase in average talk time over the past decade. With call times now exceeding three-and-a-half minutes per interaction, other key service level metrics are affected. Wait times rose from 22 seconds to 39 seconds on average, and the average abandon rate jumped 36%. While modest gains can be observed in chat and email volumes, these options still represent less than 10% of live interactions (excluding IVR), at the median. With longer, more complex calls in their queues, inbound agents handled 11% fewer inbound calls per day in 2017 than they did in 2007.
While channel activity and customer behavior are shifting, most banks struggle to keep up with the shift. Despite all the channel-related changes that banks have seen over the past 10 years, many bank execs aren’t too confident in their organizations’ channel future-readiness. From Cornerstone’s annual
What’s Going On in Banking study:
Just a little more than half of bank execs feel their digital banking capabilities are even somewhat future-ready. That percentage—54%—didn’t change between 2017 and 2018. The percentage who said digital banking is “not-at-all” future-ready or falling behind did drop slightly to 8%.
Three in 10 think their branch delivery capabilities are future-ready. And that’s down a few percentage points from the previous year.
Only a quarter believe their contact center capabilities are future-ready. Worse, a little more than a third think their contact centers are falling behind.
For all the concern in the industry about the threats of fintech startups and tech giants like Amazon and Google, banks are facing another threat: ineffective channel management. With 65% of channel investment still going to brick-and-mortar branches, bankers aren’t approaching resource allocation effectively.
For more information on the 2017 Cornerstone Performance Report for Banks, click here.