Habits and Hearsay: Truths of Consumer Changes

Before 2020, consumers of all ages were already shifting their bank activity to online channels like websites and mobile applications. Public and institutional responses to the emergence of COVID-19 accelerated those trends. Many banking consumers who had been reluctant to adopt digital service channels did so during the pandemic out of necessity. Although the shift has slowed somewhat, trends toward digital banking channels have continued and show no signs of letting up.

On one hand, the shift to digital banking represents an opportunity for organizations that are able to take advantage of digital sales channels and provide a superior customer experience. Conversely, banks that have been unable to adapt quickly are closing branches and losing to competitors who have responded strategically.

What Consumer Habits Have Changed?

According to an annual survey conducted by Chase, year-over-year trends are consistent in every age bracket, with millennials conducting more transactions online than any other age group.

Key findings from the study include:

  • 87% of respondents said they use their banking app at least once per month.
  • A majority of those surveyed said they preferred to manage their banking in one place.
  • 82% said they use digital payments at least once per month, and over half (57%) pay digitally once per week or more.
  • 46% reported using credit monitoring services at least once per month, with millennials leading the way in overall usage (75%).
  • Over half of those surveyed are using bank rewards to help fund their travel expenses.

Although consumers are more comfortable with online banking and digital transactions than ever before, physical branches are still important to a significant portion of the market. In fact, 28% of customers still prefer to visit a branch location for their banking needs according to a McKinsey Retail Banking Consumer Survey.

How Banks and Financial Institutions are Responding

Unique challenges demand solutions. For banks and financial institutions, deciding how to manage the consumer experience online and in person takes a strategic approach. While digital channels have become the go-to option for a subset of patrons, a majority of customers want a banking experience that blends in-person and online functions seamlessly.

In 2021, 37% of banks saw an increase in active branch users over the previous year while call center volume remained steady. At the same time, branch consolidation contributed to an increased usage of branches that remained open. According to the McKinsey survey, 28% of bank patrons still prefer to visit a branch location for servicing needs. That preference jumps to 50% for complex or sensitive circumstances such as those related to fraud or hardship.

So physical channels for sales and service are still vital to banking operations, but financial institutions are rethinking their approach. Leading banks are resetting frontline roles to be more versatile, and training staff to handle a wider range of customer issues.

Banks are also enhancing their physical branch experience, incorporating features from their mobile apps. For example, identity verification, e-signature, pre-appointment reminders, and queue management are all ways mobile banking tools can enhance the consumer experience at branch locations.

To survive and grow in an evolving market, banks and financial institutions must develop and enact a strategy that accounts for the growing interdependence between physical and digital channels. With physical spaces designed around an old model of doing business, banks must find strategic partners who can help them modernize traditional service venues to accommodate and take advantage of the near-universal adoption of mobile banking platforms.

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