DENVER — The Bank Administration Institute has released research based on a survey of 5,000 bank customers that challenges four popular myths and offers at least one untapped opportunity.
The research, conducted in conjunction with First Manhattan Consulting Group and which also included interviews with banking executives, offers insights that are "as much about what not to do as what to do," said Jim Hughes, director of research at BAI.
Among those four myths: 1. The branch is dead or dying; 2. All consumers should be migrated to self-service; 3. Mobile is a one-time investment that will solve channel and service dilemmas: and 4. Small businesses are well served and loyal to their bank/credit union.
Regarding myth No. 1, the now decade-old premise that the branch is being made obsolete by technology, Hughes said BAI found that two thirds of consumers surveyed still prefer the branch, and that just as importantly, that data was not affected by age, income or geography.
"It's time to quit asking this question," said Hugh Gallagher, a partner with First Manhattan who was part of a panel discussion at BAI Retail Deliver conference. "I first heard this in 1995. It wasn't happening then and it's not happening now. People still prefer the branch."
When consumers were pressed for details on what it is the most value in a branch, Hughes said the response was, "Nearby access to a competently staffed branch."
"That still dominates (findings), even for self-service consumers," said Hughes. "But the item that really jumps out at me is "competent." I think it's a key takeaway. Consumers are really looking at the level at which personnel in your branches are able to assist them."
What did consumers least value in a branch in the BAI research? Video conferencing.
Don't Push Me
Myth No. 2 is that people want to be pushed into a self-service model, the research found. Instead, what consumers want is to use the channel that best meets their needs at the time. People do not like to be pushed to a self-service model.
"Different customer segments require different solutions in mobile and online," said Hughes. "Competitive online and mobile capabilities are important to most consumers. Self-service oriented customers are interested in leading edge online and mobile capabilities."
One interesting finding, observed Hughes, is that even among consumers who prefer to use the branch an absence of a mobile solution is seen as a "major gap. That says a lot about where the consumer feels mobile banking is going."
Myth No. 3, that investment in mobile is a one-time thing, was turned up in research of C-level executives at banks conducted by BAI. "They think they are done, and that is a challenge," said Hughes. "It's a different view than the customer has."
It is in myth No. 4, that small businesses are well served and loyal to their bank/credit union, where opportunity can be found, according to several of the participants in the BAI panel.
"There are fewer 'pure' branch and self-service oriented small business customers," said Hughes. "Access to a nearly branch with knowledgeable staff is also most valued attribute by businesses. And offering mobile to business customers, even though many banks to not do this today, is very highly valued."
That last point is a big missed opportunity, according to Gallagher. "What screams to me in the research is the mobile offering for small business. Why aren't more institutions going after that, even with limited dollars? That's a home run investment."
Roadmap For What's Ahead
In terms of using the research as a roadmap for future planning, Hughes urged financial institutions that are thinking about channel distribution changes to first think about segmentation.
"Segmentation can drive distribution strategy. Who are your key clients. Can you tailor your channels to certain segments?" he asked. "The development of mini-distribution networks within the overall distribution network can be quite powerful. It doesn't solve existing branch issues, but when you take a look at some of this research it helps to craft a better strategy as it relates to distribution."
So what sort of customer experience should financial institutions be delivering in different channels?
During a Q&A that followed presentation of the research, panelist Jay Freeman, a senior advisor with Gallup, responded, "You have to think about what's really happening. The mundane things are going to the channel that requires the least amount of effort, and these days that means mobile. For many the branch remains an irreplaceable part of the continuum. All of these channels need to fit into continuum in way that makes sense to the customers. I would ask are you leaving significant amounts of customer information in one of these channels and not sharing it with others. We have these cul-de-sac situations."
