“Convenience remains among the top differentiators in choosing a bank,” notes the 2016 Omni-Channel Shopper Survey by Novantas. “But how consumers determine which bank is most convenient for them, or more precisely how they perceive that convenience, is now more involved than simply which bank has the nearest branch.”
Twenty-six percent of survey respondents said the highest ranking factor in convenience is online and mobile interactions. Other factors impacting conveniences included no ATM fees (23%); branches in close proximity (18); volume of ATMs and branches (13%); nearby ATMs (9%); and longer business hours (6%).
“There are more preference shifts ahead, and banks must plan and evolve their strategies,” the study notes.
“Being distinctive” among providers is important, and Novantas examines connections between distinctiveness and convenience. Elements of distinction include:
The banking industry has a long tradition of “commoditized product, pricing, and channel experience,” and consumers select their provider based on “a narrow set of basics.” They believe “banks are not particularly on their side.”
This week, consider convenience and distinction as loyalty drivers. How do you rate?
‘If put to the pinch, an ounce of loyalty is worth a pound of cleverness’ – Elbert Hubbard, writer
Further perspective on consumer perception of value and convenience is explored in Accenture’s 2016 North America Consumer Digital Banking Survey. Four important discoveries show banks need to offer value to members, or lose the relationship:
The study recommends five valuable tactics providers can initiate to win loyal consumers:
“Complacency is never good in an environment as dynamic as this one,” the report says. “And satisfaction is not the same thing as loyalty.”
An exploration of the branch as loyalty factor bears merit as well.
A recent cost-cutting trend has been increased branch closures, according to The Wall Street Journal. Branches may not be as critical to consumers in the advent of mobile, but “branch closures could actually make things worse for banks in the future.”
Consumers who are interested in mobile are already using the channel. Attempts to transition branch users to mobile might “imperil the cross-selling model that is already under regulatory scrutiny.”
When banks shutter a branch, the dedicated visitor is more often choosing to switch banks rather than go mobile. Those who do go mobile “are less loyal, doing more shopping around for loans, cards, and other services.”
In the last 12 months, around 40% of consumers whose branch closed chose a new bank entirely or at least selected products from other providers.
Financial institutions are left to manage checking accounts and are shut out of product lines with greater revenue opportunity.
“In 2016, U.S. consumers were almost twice as likely to have used a competing bank than their primary bank for their most recent digital financial product,” the article notes.
‘What users want is convenience and results.’ – Jef Raskin, computer expert
Financial technology (fintech) companies offer convenient alternatives for consumers, and traditional financial providers need to take note.
A Blumberg survey reported at Forbes shows “broad support for the types of services that fintech companies offer.” Sixty-two percent of adults think interest rates on debt are too high; 72% would like personalized, automated ways to pay bills to lessen interest; and 76% feel the underserved need options outside the tradition banking model.
Fintechs hear the demands and have stepped up to help refinance high-interest loans and lend to consumers with little or poor credit history.
Younger generations are most receptive and think fintechs would ease financial interactions and “democratize services.”
Consumers “trust that fintech companies are on the side of the little guy. They think innovation…helps level the playing field and makes things more efficient.”
Since younger generations are most inclined to seek innovations and are an important economic force, let’s examine millennials’ viewpoints on convenience and loyalty.
A FICO survey reveals fees are the main reason millennials switch providers, and 16% think about opening an account with an online-only provider.
Also, this group is two to three times more apt to “close all accounts with their primary financial institution than people in other age groups.”
Since millennials hold an average 6.27 accounts versus 5.79 for other consumers, switching financial institutions is impactful.
One idea to combat the issue is to redo fee structures. “Banks need systems that employ intelligence to the way [fees] are applied. Today, smart institutions are already building models that look at the long-term profitability, attrition risk, and historical fee waiver requests…and then make an analytics-driven decision to proactively waive a fee, provide reactive fee refund offers, or not refund fees at all,” notes Joshua Shnoll, senior director at FICO.
The Financial Brand examines another survey on millennial mindset. Again, perception of provider’s level of concern is important.
“Millennials are the generation least likely to strongly agree that their bank knows them, looks out for them, or rewards them…they are…the most ignored by the industry.”
Is provider distinction an issue? Fifty-three percent of millennials feel their bank doesn’t offer anything unique compared to others, and almost half think tech start-ups will “overhaul banking.”
Providers can improve relations by putting mobile-first, personalizing services, and by partnering with fintechs.
‘You don’t earn loyalty in a day. You earn loyalty day-by-day.’ --Jeffrey Gitomer, author
Finally, Gallup says good relations are not all about channel experiences. “There are many other factors banks can control that have the potential to enhance customer engagement.”
Consider the roles of outstanding customer-centric services and products, a powerful brand whose promise is evident in every experience, and “effective problem resolution” that “can turn threats into opportunities.”
Correlations between value, distinction, personalization, engagement, and loyalty seem obvious. Consider each one of these components as you create unique products and foster amazing service interactions.
What exactly does convenience mean to consumers, and how convenient are you?