The Wall Street Journal began a recent article on consumer banking preferences (paywall) by asking, “What do consumers want most from their bank?” and answering, “Easy access to it.”
The piece cited customers’ strong preference for accessing their bank via mobile and online channels, and paying for purchases with cards rather than cash, as evidence of their wish for an easy life. While CEB data also show customer preference for digital channels – the majority of North American consumer banking customers now prefer a digital interaction with their bank than with a person – that doesn’t mean investing in making things easy will pay off for banks.
For a start, “digital” doesn’t necessarily mean “easy.” CEB analysis shows banks that only use digital technologies to make it easier for the customer to reach the bank aren’t rewarded by increased customer loyalty.
Don’t Make it Easier for Them to Do What You Want…
In a comprehensive 2015 survey of consumer preferences, CEB measured the “loyalty impact” of different kinds of efforts to make money from a customer base that relies increasingly on digital banking.
Loyalty was measured somewhat cynically, by identifying clients who produced new revenue for the bank as “loyal.” Analysis of the survey data showed that there is little difference in the loyalty of customers whose banks have invested in making day-to-day interactions with the bank easier and the customers whose banks have not.
Frustrated customers will punish institutions that haven’t made interactions “easy enough” by leaving the bank. But if an institution that has made banking sufficiently easy that customers aren’t actively leaving, making banking even easier won’t help.
That’s because these day-to-day interactions are what banks force customers to do. Making that easier might make customers’ banking relationship more pleasant, but it doesn’t help them accomplish their goals.
…Make it Easier for Them to Do What They Want
But there is something that does make customers more loyal to their bank: when a bank helps someone take the right steps for saving the funds to buy a car or a house, say, they generate one-and-a-half times as much loyal behavior (which directly translates into increased revenue) than when they do not.
Furthermore, the survey data show that the kind of help customers are most likely to reward their banks for isn’t financial planning or making purchases easier, but banks that help them stay on track towards their goals.
So, yes, managers should invest in making access to existing bank products easier, but also realize that this is just the baseline. Investments that focus only on ease of access are not likely to generate returns beyond avoiding defection, instead investments should also help customers with financial goals.
Those might seem like small shifts – even for community banks – but their implications are significant. They imply a change in the grounds for competition in the marketplace from distribution (“We’re your local bank”) to the product being offered (“We are best equipped to help you.”).