Data from the 2014 U.S. Primary Mortgage Origination Study (released in November 2014) finds that mobile apps have an opportunity to emerge as an important interaction channel for customers.
Current usage is low, with only 8% of customers indicating that they used an app during the origination process. However, as shown in the chart below, over half (53%) of customers who have not used an app during the mortgage origination process would consider using one for their next home purchase or refinance. Specifically, customers would be most interested in using an app to check status (47%), review next steps (35%) and review/confirm loan details (34%).
With the continued acceptance of digital banking channels, it is important for financial institutions to ‘keep up with the times’. Even banks that promote personal service as a key part of their value proposition need to devote investment resources to their digital channels. Failure to do so may put the bank at risk of losing customers that represent future growth potential (ie. Millennials), who have already shown a preference for digital interaction.
Data from the 2014 Retail Banking Study provides an interesting case study on the impact of investing in digital channels. As shown in the graphic below, ‘Bank A’ has been investing heavily in digital channels while ‘Bank B’ has not. Bank A has seen a greater lift in customer satisfaction, driven by their technology improvements. It is also important to note that, despite a heavy investment in digital interaction, Bank A has also been able to significantly improve the branch experience.
The chart below provides further evidence of the impact of investing in digital channels, as interaction scores for Bank A are significantly higher than those at Bank B. Additionally, the negative ‘gap’ in digital satisfaction between Bank B and the industry average has widened considerably.
Finally, the real impact of investing in digital channels is shown below, as Bank A has seen their key loyalty and advocacy metrics improve, while Bank B has seen declines.
USA Today ran an interesting article last week entitled “Will Bank Branches Wither Away?” It always catches my eye when someone even suggests the demise of brick-and-mortar branches, even in this day and age of iPhones, Droids, ATMs, etc. The article does cover some interesting perspectives on how banks like Citibank are going greener by eliminating paper and other banks like Chase continue to expand branch presence into new geographies. So IS the branch going the way of the Dodo Bird and buggy whip? Not necessarily.
But the raison d’être of the branch has certainly evolved and reflects the changing needs and preferences of a more mobile and self-serving consumer population. In contrast to the ABA research quoted in the article, which reported 62% of customers prefer online versus only 20% branch, J.D. Power and Associates’ 2011 Retail Banking Study found a slightly narrower gap. In the 2011 study, preference to online was 52%, 23 percentage points higher than branch. While that still reflects a significant tilt towards online, it also shows that “…the report of the branch’s death was an exaggeration.” (our thanks to Mark Twain).
What role does the branch seem to play in today’s increasingly technological world? Continue reading ›