The Evolution of Customer Interactions
The debate over the future of retail banking in the face of the technological revolution is rife with opinions, with perspectives ranging from panic to optimism. But we see a fundamental shift in the way customers interact with their institutions, a shift that is moving the industry away from a simple transactional focus to a future of more personal, consultative customer relationships.
Five years used to be a relatively short time in the financial industry, but today rapid technological advancements are accelerating changes in the way we interact with banks. Five years ago most Americans didn’t own a smartphone, but now more customers are using mobile banking than visiting branches. And five years from now, we’ll be looking at a much different picture of customer interaction.
Let’s dive in to the future of three areas where we’re seeing the biggest changes in retail channel delivery.
- The Intersection of Digital and Brick and Mortar
This shift to mobile and an accelerating branch closure rate points to the downfall of the branch, right? It’s the “retailpocalypse” as one publication puts it. But don’t start planning the funeral just yet! Let me explain why this is a good thing and why branches are actually gaining relevance:
The average in-branch transaction costs a staggering $4 while a mobile transaction costs only about ten cents, and when most in-branch transactions are low-value activities such as deposits and balance checks the ROI on a branch isn’t great.
Financial institutions that embrace technology integration both online and in the branch are able to drastically lower the ratio of low value transactions taking place in a branch. In addition to mobile and online investments, interactive teller machines (ITMs) in the branch can bridge the gap between the faceless ATM transactions and the personal interaction of a teller. Technology bars provide an opportunity for staff to educate members on mobile technology, boosting mobile adoption rates. And revolutionary new mobile video branching is actually bringing full branch services to wherever the customer happens to be, from rural villages to the other side of the world.
The blurred lines between in-person and digital services will require not only an effective digital strategy, but also a branch strategy designed around this new customer relationship.
- From Transaction Spaces to Conversation Spaces
FinTech firms may be gaining the upper hand when it comes to taking over more basic services, such as sending money to friends or mobile wallets. But in an ironic twist, the lack of branches that makes them effective at delivering these services is preventing them from gaining a foothold with the higher value transactions.
When it comes to more complex services like taking out a home loan, it turns out that personal interaction beats convenience. Even millennials overwhelmingly prefer to come into the branch for these transactions. If many of your customers are coming in to talk about a loan, suddenly that $4 per transaction cost doesn’t seem so bad!
This trend is leading to a fundamental shift in the purpose of branches from transaction spaces to conversation spaces, and recent branch designs are shifting to more efficiently facilitate these interactions. Teller lines are disappearing in favor of more open layouts featuring teller pods, and in areas where mobile adoption is highest financial institutions are forgoing teller areas all together in favor of café style branches and universal associate staffing models.
- A Seamless Transition Between Delivery Channels
Future customers aren’t going to just use a single delivery channel, it’s vital that an integrated technology strategy facilitate a seamless transition between them.
A customer may pre-fill part of a mortgage application on mobile after clicking a Facebook ad, and if they come into the branch that information will be available so the staff are able to smoothly pick up where the customer left off. Marketing emails can be customized to the customers’ unique needs, drawing detailed insights from the CRM system. A transaction begun on a universal associate’s tablet will be able to be completed online. In fact, research indicates that 32% of product purchases that begin with mobile research are completed in a branch.
And most importantly, a customer’s favorite FinTech service will be integrated into their retail and mobile experience via an open banking API. Many consumers prefer third party fintech apps, and for good reason. These companies, like Mint or Acorns, have total focus on the services and experience they deliver through their app. By providing an open banking API, financial institutions can ensure that app developers have fast, secure, and controlled access to data the customer chooses to share and can deliver a seamless customer experience.
Consumer expectations are growing as fast as technology evolves, and the financial institutions that embrace this change by providing high quality, relevant, and integrated experiences will thrive in an uncertain future.