In spite of digital channel usage rising 55% during the pandemic and 41% of customers now being digital-only, the fact remains that branches are still playing a key role for customers.
Forty-three percent of people still choose their bank or credit union based primarily on its convenient locations. The physical presence of branches contributes to a perception most people have that traditional financial institutions are safer and more secure than their online counterparts. And what about those times when a customer has an issue that can only be satisfactorily resolved with human intervention? In short, while digital channel use is on the rise and will only become more entrenched as the preferred channel for many banking services, customers still want peace of mind and people found at their local branches.
Optimize the delivery network
Because branches still have an important role to play, and because it’s essential to continue to enhance your digital capability, you’ll need to consider what the optimal combination of physical and digital channels is to deliver an enhanced customer experience. For example: While digital channels are now preferred for basic transactional banking for most customers under age 55, there is some variation in how different customer segments prioritize the branch. Baby Boomers and Gen Xers, for example, come to the branch to work with a human. Gen Z and Millennials prefer to resolve problems in person at the branch.
Getting the balance right is critical. According to Deloitte’s 2021 Banking Outlook, customer satisfaction drops in the US as digital adoption increases … and digital adoption is up.
Understanding what your customers need when they come to visit a branch allows you to adjust the branch model to deliver a better experience. Capital One has made this a focus with the introduction of their café locations. With 45 cafes and six more on the way in 2021, these locations emphasize engagement over transactional banking. They blend digital and people in such a way to facilitate access to the best of what both resources can offer: Convenience and expertise.
Similarly, using customer needs to prioritize the enhancement of your digital experience is a strategy to maximize the return on your technology spend. The top priorities for digital enhancements are driven by customers’ demands for digital self-service: Digital advocates in the branches, ITMs, video ATMs, and interactive digital welcome screens.
Two of these priorities cross over between the digital and the branch experience. Digital advocates are staff members who are well-versed in your digital banking tools and who are available to assist customers with the ins and outs of online and mobile banking, and any other convenience tools you offer. Having these in-house ambassadors to demonstrate the ease of your systems provides the best of both worlds – a digital experience delivered in person.
With ITMs and video ATMs, customers can complete virtually any transaction that can be completed at the teller line without ever entering the branch. ITM use during the pandemic rocketed for those institutions, like Pioneer FCU in Idaho, who maintain a fleet of machines. (They have 21.) The ITMs now average 11,500 visits per month, double the pre-pandemic number.
Digital Drives Convenience
Other digital enhancements are geared to improving customer service and enhancing convenience. Digital self-service elements include the ability to control a debit card via mobile app, for example. Customers are also seeking improved – and extended – customer service via tools like 24/7 chatbots and the ability to contact customer service from a mobile app. Pioneer FCU introduced Mypioneer Personal Assistant App that delivers face-to-face customer service via a video app. During and post-Covid, use of the app has increased five-fold. Increased digital usage has made customers more comfortable with these avenues for service
Differentiate and Deliver on Customer Needs
In a recent Galapagos study, customers were found to have an increasing desire for interaction with and advice from their primary bank or credit union. Twenty-six percent of people stated that the most important thing their FI could do for them is providing products, tools, and advice to help them make the most of their money, and 24% want day-to-day money management to be easier and/or more convenient. And this echoes what is being seen on a broader level. Gen Z wants 24/7 access to customer service and advice, while Millennials crave more personalized communication and advice delivered conveniently.
Can advice be delivered digitally? In some cases, yes, with enhanced aggregation, personal finance management (PFM), and prompting tools. But that personalized advice and expertise is also a key advantage FIs have – so how can it be leveraged? How can you engage your branch teams more so that they can differentiate your FI and deliver on the increasing need for consultative advice that customers are saying they want? Some tactics to incorporate into your 2022 plan could include:
Customer Relationship Management. Increase the management of customer relationships through books of business and regular customer outreach, driven by an analysis of customers’ banking behaviors and by profiling their likely needs. These personalized and regular touchpoints highlight your FI’s role as a financial partner, available with expertise to guide customers with solutions and knowledgeable advice.
Add Outreach. Within your marketing campaigns throughout the year, integrate content with outreach efforts. Identify customers who fit particular needs-based profiles and reach out with relevant and specific messaging.
Needs-Driven Messaging. Thoughtful analysis of customer behaviors allows you to identify your customers’ likely needs. Craft messaging that responds to those needs, positioning your FI’s experts as the solution.
The Long-Term Strategy
As customers return to a new normal following the pandemic, FIs should expect them to want some of the familiarity of pre-Covid life but not to give up their newly-acquired digital behaviors. In this state of flux lies the opportunity to forge a new channel strategy that achieves your goals to differentiate your customer experience, improve service, attract new and younger customers, and/or cut costs.
As we review the current landscape, we have seen community banks and credit unions gravitate toward three, primary strategies:
All App, All the Time
All touchpoints direct customers toward the Mobile App for both self-service and transactional banking needs and to resolve customer service issues.
Additional service capability is added through Chatbots and “live” video-based customer service
The goal is to accelerate what is seen as an inevitable customer movement toward mobile channels
Multi-Channel Digital
The Mobile Banking App is complemented by an array of other interactive digital channels that provide greater transactional and service access, such as ITMs and video ATMs
Consultative service is separated from the Mobile App and delivered
Digital delivery is the dominant focus of this model, but branches (fewer of them) are still deployed as regional centers that service customers’ more consultative needs
Phygital
The branch retains a central role in delivering customer service, both transactional and consultative
Digital channels are enhanced to meet the needs of customers who prefer Mobile banking
This strategy is preferred by most FIs because it can be adjusted gradually as customer behaviors continue to evolve
The strategy speaks to the hope that branches provide a competitive differentiator in the delivery of consultative and advisory services.
Just as your customers’ needs have shifted, their expectations have as well. Whatever strategy you select, you are now expected to deliver seamless, convenient service along with personalized customer care. Need help determining where to start with your channel strategy? Give us a call at 616.608.7359.