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Will Customers Still Use Branches if They See a Great Digital Alternative?

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“Your satisfaction is our top priority. So, if you could try to act really satisfied, that would be a big help.” —Randy Glasbergen

Ask four different industry experts how satisfied bank customers are with their delivery options and you’ll likely get four completely different answers. Recent examples:

  • The J.D. Power 2018 Retail Banking Satisfaction Survey—which did not include any digital-only banks or Fintech providers—found that the most satisfied customers regularly use both branch and digital channels (823 score of a possible 1,000), followed by branch-only users (801), with digital-only channel users the least satisfied (791).
  • A Fiserv study revealed that 44% of customers prefer to do routine transactions with tellers at a branch rather than online.
  • The most recent Cornerstone Performance Report shows that 90% of accounts are still opened in branches (a number that has been corroborated in other studies).
  • Another J.D. Power 2018 survey revelation was that 71% of millennials use a branch an average of 11 times a year.

So, there are a couple of ways to interpret these numbers:

  • Interpretation #1: Banks should encourage customers to use digital and branch channels because the use of multiple channels is the thing that makes them happiest.
  • Interpretation #2: Despite the cool digital options banks have given them, there are a bunch of customers who just prefer visiting a branch.

In other words, looking at these studies, one might conclude that despite the advances of digital delivery there will always be a pretty big group of customers who will continue to choose branches to do their banking.

I don’t buy it.

For example, I just don’t buy that those millennials went to a branch to do something, then used a self-service option to do the same thing, then decided to keep visiting a branch 11 times a year. And I sure don’t think they have 11 transactions a year that can only be done in a branch, unless their lives are way more complicated than mine.

The problem is that these numbers and results are only valid if banks have given customers a great digital experience as an alternative to branches, made them aware of that option, then shown them how to use it. And that just isn’t the case yet.

Most banks:

  • Don’t believe their online account opening experience is great;
  • Don’t know if all their customers are aware of what banking they can do on their phones; and
  • Don’t have branch employees who are digital experts and can sell the digital experience.

Until banks have great digital delivery, branch-related survey questions produce a stacked deck.

Yes, I’ll go to a branch to open an account if the online experience is not as good yet. Yes, I’ll go to a branch if I haven’t seen an equally good digital option. But, my prediction is that when given two equally good choices—branch or digital—a large majority of people will choose digital. Seriously, how many of you reading this right now would choose to visit a branch if you had a great digital option? The answer is … let me get my fingers and toes out to count here … right. NONE.

Banks have history here. Customers were happy cashing checks in branches until ATMs came along. They were happy writing checks in stores until their bank gave them a debit card. They were happy calling to get their balance until their bank gave them Internet banking. They were happy to go into a branch to apply for a credit card until an offer came every day in the mail that took about 10 seconds to complete. In every case, given a good alternative, they left the old option in droves. It will be no different with digital delivery. To be fair, banks are not all the way toward building the digital alternative because the tools are still maturing, but they will be—and sooner than everyone thinks.

So what? There is a crucial reason why all of this matters. Financial institutions surveyed for the Cornerstone Performance Report said 79% of all delivery costs are still directed at branches, compared to 21% directed at all digital combined. Seventy-nine percent is too much, and banks can’t afford it. Banks need to reduce the percentage that is spent on branches and redirect it to digital investments.

The way to accomplish that? First, of course banks give customers choices for delivery. I think we all like the idea that we can go to a branch if we really need to, even if we never do. And nobody is saying that customers who really prefer to go to a branch shouldn’t. But at the same time, banks need to give customers digital choices that provide equally good experiences. Then they need to be shown why they should choose the digital option.

A great digital experience will be the choice of most consumers. It will free up dollars banks now spend on physical delivery to be reinvested in an even better digital delivery solution. And the next J.D. Power study will show higher satisfaction scores for digital-only customers.

So, let’s give choice. But let’s make the choice obvious and easy. We really have a unique opportunity for a win-win here.


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