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Retail Banking: Why Your Most Valuable Customers are Going Online

A global survey of over 5,000 customers shows that banks should look more closely at their online channel

Online Banking Website ScreenshotThe retail banking industry is primarily designed to serve customers and sell them new products through banks’ networks of physical branches.

But a large and growing proportion of customers now use digital channels for what are typically thought of as “high-touch, in-person activities” (see chart 1). These are things that have traditionally required a human being to help customers make complex choices, such as learning about or purchasing financial products.

Percentage of Customers Using the Web to Purchase Banking Products

Chart 1: Percentage of customers using the web to purchase banking products in the past year  n=5,210 (global); 2,221 (mass affluent); 673 (ages 18-29)  Source: CEB Retail Banking Customer Experience Survey

CEB’s survey of of over 5,000 banking customers shows that overall, however, customer channel preferences appear to have changed relatively little since the survey was first fielded in 2010.

While the proportion of customers who prefer to use more personal channels like the branch and phone for all their banking activities grew slightly, and the percentage who mostly or only prefer digital channels declined slightly, the significant changes were within the “mass affluent” and/or younger customer segments.

Shifting Preferences in Important Customer Segments

  1. Largest shift seen among “high-potential” segments: High-potential customers are those that give banks the most opportunity to make money. For the mass affluent and customers ages 18-29, there is a much clearer shift in preferences toward digital.

    Unlike the global trend, the percentage of consumers who prefer personal channels for banking decreased for both segments, while there was strong growth for those multichannel and digitally-focused customers.

  2. Many now use digital channels for purchase: This shift in preferences has striking implications for how some of the most promising customer segments choose to interact with their providers. As late as 2010, there were still clear, dominant customer preferences for performing certain tasks in certain channels.

    Customers did research and managed their products online, while they relied on the branch for purchasing and receiving support. But that distinction is starting to blur: now the mass affluent are more likely to turn to non-branch channels when purchasing, and young people aren’t far behind (see chart 1).

  3. More customers use multiple channels: More than half of mass affluent and customers ages 18-29 use multiple channels across the life cycle of a financial product.

    And in aggregate four out of five banking customers use the online channel and three quarters visit the branch on at least a monthly basis.

While it is true that most still rely on the branch to conduct certain activities, most banks’ traditional, branch-based sales and service approach will probably be ineffective at engaging a large and growing number of the highest-opportunity customers. Progressive firms look to improve relationships with their best customers by assessing how key channels support the firm’s capacity to achieve their strategic business priorities.

To learn more about changing customer channel preferences and behaviors, CEB Retail Banking members should use the tools, templates and case studies in the resource center on their dedicated website.

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