03. 02. 2018
Digital banking basics: cut mobile lag, bring more products online
Digital tools to boost sales have never been more important to banks. But guess what, many of them still neglect mobile and digital channels.
Several factors could prevent banks from tapping digital sales growth potential and fully exploiting sales opportunities. With all the buzz about digital transformation and the increasing threat from new competitors, like fintechs and big techs, it may come as a surprise that many banks still lag in developing basic technology for online and mobile use.
Designing multifunctional, easy-to-use and convenient websites and mobile apps would be critical to attract new customers and keep the loyalty of existing clients. Yet on these basic characteristics, banking apps and websites often fall short in the view of many customers.
Here are some telling results from a recent survey by Bain & Company. Only 45% of UK users is satisfied with the website of their primary bank, while the same ratio is only 25% among mobile customers. Or take this one: only 34% of mobile customers find the app of their bank easy-to-use.
And beyond these basics, banks have barely touched some technologies that have reached a tipping point in consumer markets, like voice assistants. Financial institutions mastering the digital basics will be able to further secure customers’ loyalty by quickly putting the new technologies to practical use in test-and-learn prototypes, the report suggests.
Digital banking sales: step up digital efforts
Maybe digital laggards forgot what is at stake. Banks may lose much of their business unless they focus more on digital transformation and boost digital sales capabilities. McKinsey has estimated that US and Japanese banks have between $1 billion and $45 billion of profit at risk by 2020. British and European banks could see their combined profits halve to $50 billion in 2020 because of digital disruption.
Financial institutions have been trying to migrate routine transactions to digital channels from branches or call centers for several years. This aims to save costs and make basic transactions quick and easy to complete.
But banks still have a long way to go in many countries. As many as 40% of US respondents in Bain & Company’s survey, for example, made a deposit in a branch in the latest quarter, compared with 21% using digital channels.
Customers are increasingly willing to buy banking products digitally. In fact, they are also often ahead of banks in terms of their willingness to use new channels. Users are not only logging in to check balances or buy simple products. Many bankers have long thought that human interaction is needed to make a complex sale, but McKinsey has found that is not true.
Believe or not, clients are happy to buy and be advised online and via remote advisors even for such products as a mortgage loan. But they need to be able to find the best product for their needs easily and get enough information to be confident in the purchase.
And there is another thing banks probably know already: the remote model is less expensive. Costs to provide a remote advisory session, for example, is typically 25-35% lower than in the branch.
Bringing more products online is key
Most banks don’t take action on digital sales opportunities, especially when it comes to supporting mobile devices. According to a survey by Avoka, less than 30% of all products can be applied for through digital channels, and still only 43% of personal banking products are enabled for mobile customer acquisition.
Personal banking products lead in current digital offerings, especially with account opening as the single most important flagship digital offer from banks. But more profitable corporate and wealth management products continue to lag even further behind.
Only one third of the banks in this survey has reached the Digital Promise Land, which is the minimum readiness for digital sales. It is a promising sign that 9 out of the 32 participating banks “are getting serious” in their effort to develop mobile and digital products. So it shouldn’t come as a surprise that these institutions showed double digit 2017 growth in readiness for digital sales of personal banking products.
The availability of digital banking products is becoming even more important as the group of customers exclusively interacting with banks through digital channels is rising. Omni-digital customers, who skip physical channels altogether, already accounted for 46% of clients in 2017, up from only 27% five years earlier, PwC said.
Mobile banking: use your data for offers
Retailers and e-commerce giants have long unlocked the key to selling on mobile devices, but banks are still lagging both in the onboarding of new customers and cross-selling to existing ones, Mapa Research said. It reckons this trend is about to change though with some incumbent banks already recognizing the importance of mobile as a sales channel.
Banks possess myriads of customer data, but many of them still send out general offers or no offers to users, especially on mobile. Mapa Research found, for example, that only one (Citi) of four major US banks (Bank of America, Wells Fargo and JP Morgan Chase) had advertised a genuine customer incentive at the front of its mobile public site (for its checking account).
Let’s compare that to what digital-only rivals are doing. German challenger bank N26 directs applicants to its mobile app already during the onboarding process, while Starling Bank and Monzo in the UK have even branded their referral schemes in their applications.
Or here is another trick. To avoid abandonment during the period between application and receiving the purchased credit card, Australian lender NAB offers customers a virtual card to make contactless payments of up to A$100 via NAB Pay.
For more on how to boost digital banking sales, download W.UP’s white paper “Digital sales: 12 strategies for banks to win the digital world war”.