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, offers insights that are "as much about what not to do as what to do," said Jim Hughes, director of research at BAI.
Myth 1: The branch is dead or dying
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. "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? Video conferencing.
Myth 2: Consumers want self-service
What consumers really want, the survey found, 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 3: Mobile is a one-time investment
"[Bank executives] think they are done, and that is a challenge," said Hughes. "It's a different view than the customer has."
Myth 4: Small businesses are loyal
It is here where some real opportunity can be found, according to several of the participants in the BAI panel, after debuning the idea that small businesses are well served and, therefore, loyal to their banks or credit unions.
"There are fewer 'pure' branch and self-service oriented small business customers," said Hughes. "Access to a nearby branch with knowledgeable staff is also a 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."
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."
