The Customer Effect

Five charts that show how physical bank branches are here to stay

  • Banks may be reducing their branch presence, but branches are still one of the most important parts of the business.
  • Branch customers have higher satisfaction levels than mobile customers, according to a J.D. Power report.
close

Email a Friend

Five charts that show how physical bank branches are here to stay
Despite all the worry (or excitement) about banks getting rid of branches, banks aren’t getting rid of branches. Sure, they're reducing the number of branches and using the remaining ones in a way that's more in line with consumer behavior in a digital world. But branches remain one of the most important parts of their business, particularly outside of major cities and urban areas. And, despite many young people’s inclination to do most of their banking digitally, having a branch and ATM presence is still a big factor in where they decide to bank, even if they never use them. "It's becoming increasingly clear that banks that can get the balance right between digital and personal interactions will be those that build the strongest customer relationships," said Jim Miller, senior director of banking for J.D. Power. The following five charts show that while non-traditional branchless banks like Ally Bank and Capital One 360 have an edge over brick-and-mortar branches, both are equally important to customer experience and satisfaction. Banks are improving digital strategy, but digital-first banks have happier customers J.D. Power's most recent Canadian retail banking satisfaction report shows that a well-executed online virtual business model leads to higher customer satisfaction. Canada's largest banks led the customer satisfaction index rankings, each with scores over 750 on a 1,000-point scale. Midsized banks performed only slightly better. Tangerine, the digital lender owned by Bank of Nova Scotia, still outperformed them all, with an index score of 840.

Bank customers are still using tellers, ATMs and the telephone More people may be using mobile banking apps -- and usually, all they’re doing is checking balances -- but branches and call centers are still handling high levels on routine transactions: depositing, withdrawing and transferring funds. Last year, for example, 90 percent of customers visited a teller in the third quarter and half called their bank, according to a Bain study on transaction migration. customers still use ATMs, tellers, phone And it's not true that older people are less open than the young to mobile or digital banking, according to Bain. They're half as likely as the youngest group to bank on mobile or web browser, but ATM and phone use falls off among the older segment and that they're just as likely to bank online suggests they'll embrace mobile when the circumstances are right. And older respondents have rated their banking experiences on smartphones or tablets highly, more so than younger customers, who tend to be critical of app quality, appearance and functionalities. Customer satisfaction is highest in branch visits, but also the least consistent Among the channels measured for interaction satisfaction, branches had the highest performing with a high score of 927, but they also ranked lowest in satisfaction, with a low score of 813. That means there was a 114-point difference between the two. Mobile however, had the shortest range, with a high of 898 points and a low of 842.

The figures show how much further banks need to go in making customer experiences consistent across all channels. To do that, they'll have to define the expectations for experience, train frontline staff on key behaviors, track performance and reward employees who meet expectations. Tellers are often a last resort bank-branch-call-center-traffic-jam-fig-11_full Sometimes there are hidden fees, sometimes there are privacy issues. But many people resort to tellers because other channels proved too difficult, Bain found. The line was too long, the ATM was taking too long, there were access issues with their login information or they didn't have their bank card. More than 70 percent of transactions failed or were abandoned simply because the experience was too complicated. Mobile banking growth is plateauing  Mobile banking has plateaued in most countries, but it actually declined in China, which is probably at least in part to do with the fact that Chinese customers have so many financial services available through its mobile payments platforms. customer-loyalty-in-retail-banking-2016-fig-04_full The number of consumers that use their bank’s mobile app leapt from 32 percent in 2012 to 52 percent in 2015, according to Bain, then to 55 percent in 2016. That shows that early adopters -- ahem, “millennials” -- have already adopted. Older customers like digital banking and may soon embrace mobile. Branch users still need to be convinced.

0 comments on “Five charts that show how physical bank branches are here to stay”

The Customer Effect

The White House is proposing an increase in the capital gains tax. What will non-white groups gain?

  • The White House is proposing a hike in capital gains tax as part of a deficit reduction plan.
  • The taxation system in America needs another look, so far the balance has been tipped in the favor of investors and white households. Will the capital gains tax rebalance the scales?
Rabab Ahsan | March 15, 2023
The Customer Effect

Americans think financial literacy can help them cope with the cost of living

  • Consumer prices are rising and the cost of everyday goods is expected to remain volatile.
  • With the frequent ups and downs in the economy, consumers are starting to bank on financial literacy to help them weather the storm.
Rabab Ahsan | March 02, 2023
The Customer Effect

Consumers are relying more on credit in this bad economy

  • Due to economic headwinds, people are turning to credit to make ends meet.
  • What will this upswing mean for issuers in the future?
Rabab Ahsan | February 24, 2023
The Customer Effect

How are Americans coping with their financial burnout?

  • Americans are feeling financially overwhelmed due to sustained inflation and slow economic growth.
  • Many consumers are now putting a greater emphasis on financial well-being, and have increased their reliance on digital banking tools.
Sara Khairi | February 13, 2023
The Customer Effect

With high inflation, are savings out of the picture for American consumers?

  • Inflation has been affecting saving habits across the board as consumers have to spend more to afford basic necessities.
  • Given the turbulence of the past few years, paying off debt has been ranking high on the list of savings priorities for most Americans.
Rabab Ahsan | February 08, 2023
More Articles