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.
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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.

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