AUTHORS: Deirdre Jennings – Strategic Accounts and Bid Manager & Shallabh Pal – Digital Banking Specialist
As the UK economy continues to struggle and we are hit with further fuel hikes, people will probably become more unadventurous in their investing habits. In these times of increasing interest rates, rising vehicle fuel costs, and energy costs, customers are looking for new products to help them. This includes mortgages, savings, loans, and all non-essential purchases.
JP Morgan1 conducted a survey in April 2021 that examined consumers’ relationship with cash, savings, and digital banking tools, a year after the start of the pandemic. In which, 41% of respondents said they wished banks provided more personalized offers or information to help them achieve their financial goals.
The pertinent question then is, do present-day banks have the requisite systems in place to help their customers, with newer and innovative ways, to fulfill their savings goals? Thus far, most banks have marketed their products and services, using a broad demographic segmentation. But as consumers become savvier and with advancing technology, consumers expect offerings tailored to their needs and interests, that can help them achieve their financial goals. Thus, Banks today need to step up and use insightful data to fine-tune their offerings, including customer, products, and pricing strategies to deliver on their customer expectations or be left behind.
Digital Channels Now Put The Choice In The Hands of The Consumer
For the new-age customer, consuming content is no longer confined to a single device or location. In an ‘Always On’ age and economy, we are using more than one device at a time, moving seamlessly from one device to the other, either sequentially, simultaneously, or separately. So when it comes to banking, customers expect the same level of effective yet seamless experience from their providers. And so, the question is, how should banks deliver on a similar type of seamless customer experience journey, for their customers?
According to the research outfit Publicis Sapient’s Wealth and Asset Management report 2, 40% of investors say digital access has become a greater priority and 89% say their preferred channel will be mobile apps. These two figures alone demonstrate how banks need to reinvent their user’s journeys to increase ease of access rather than segmenting access across multiple channels
The technology already exists to deliver those kinds of omnichannel journeys. We will see success in the future with those banks, that can move their mindsets to a customer-first journey structure, that seamlessly bridges silos and gaps because customers who hit these obstacles can easily find an alternative provider.
In a recent survey conducted by YouGov 3 in the UK, respondents explore how attitudes and behavior towards digital banking have changed since March 2020.
Some of the key findings from this research are that:
- 81% of adults say that the quality of online experience determines who they bank with.
- Use of online web banking overall rose significantly, with half (50%) of those who have used digital banking services more since the pandemic began, stating they have used online web banking more often.
- The highest rise in usage for online web banking was amongst the 55+ age group (60% used this service more often).
- Amongst those who have used digital banking services more since the pandemic began, 35% of 18–24-year-olds increased their usage, followed by 32% of 25–34-year-olds and 31% of 35–44-year-olds.
- The 55+ age group remain more reluctant to embrace making payments via smartphones and smartwatches, with only 16% of this age group increasing their usage.
- The importance of online experiences between different age groups was illuminating, with 46 % of those in the 55+ age group stating that it was “very important” compared to only 26 % of 18–24-year-olds.
- This growth in the use of mobile banking apps is led by the under 35’s, with 85% of 18–24-year-olds and 79% of 25- 34-year-olds using mobile banking apps more often. Use of mobile banking apps within the 55+ age group has also seen a significant increase (52%).
While this research clearly shows that the events of the past 18 months have accelerated the adoption of digital banking services by consumers across all age ranges. It was interesting to note that, although the quality and ease of use of the digital experience is of high importance to a large majority of users when choosing who they bank with, this was more so of the highest importance to the age group of over 55’s.
The Caring, Sharing Bank
Time and time again, investors are reporting that key criteria when selecting an investing firm are, demonstratable ethical business practices, vision and integrity, and social purpose. As Environmental, Social, and Governance (ESG) become increasingly prominent, banks can no longer make claims without committing to action.
The report by Publicis 3, also states that 34% of investors will seek ESG investing advice over the next two years. And in, over 4 out of 10 banking providers believe that their customers expect them to be knowledgeable on social impact investing and offer ESG products and services.
The banking industry is thus uniquely positioned to play a vital role in pushing forward their customers, communities, and the economy. Customers today, want to know that their financial institution cares about their concerns. This becomes more important when we see that, those in the boomer age group are more likely to invest in green bonds than millennials (15% compared to 10%) and even more likely to invest in green funds (32% and 22%, respectively) 5 . These types of customer behavior can then be expected to include investing more in ‘safe’ government bonds and savings to ensure ethical and solid savings potential if the market becomes more volatile. Therefore, providing cost-effective financing for the public good and offering trusted savings and investments propositions on the back of insight-propelled digital platforms is a winning strategy for banks, to make a real difference to their customers.
Banks today, can therefore win and keep customers by addressing their needs and concerns with great digital experiences and insightful data to deliver more effective customer services, while also prioritizing products or services aimed at positive social impact. With data-driven insights, Banks can effectively, take an active role in integrating ESG issues into their financial decisions thereby addressing their customer needs, better managing risks, working on improving returns, and most importantly staying in the game.