Tectonic Shifts In Banking Channel Preferences

The American Bankers Association (ABA) released the results of its 2011 survey of US consumers’ preferences of banking channels. The survey of more than 2,000 U.S. adults found that:

62% of adults prefer to use the online channel to do their banking — up from 36 percent in last year’s survey. And for the first time, the majority (57%) of customers 55 and older say they opt to do their banking online, a significant increase from 20% in 2010. The popularity of all other banking methods has declined since last year’s survey, with preference for branches dropping from 25% to 20% and preference for ATMs dropping from 15%to 8%. The least preferred method of banking was the mobile channel, which dropped from 3% in 2011 to 1% this year.

My take: I have three reactions to these findings:

1.  The shift is too dramatic. I’ve been doing consumer research in the financial services industry for most of the past 12 years — looking at the adoption of online banking, online bill pay, account aggregation, eStatements, PFM, etc. — and I have never seen, year over the year, the kind of change reported by the ABA. 

From 2010 to 2011, the percentage of 55+ year-old consumers that prefer to bank online nearly tripled from 20% to 57%. Why? What the hell happened between last year and this year that suddenly made Boomers wake up to the benefits of online banking?

Even the shift among all adults — from26% to 62% — is huge, but it’s hard to tell how much of that shift is being influenced by the 55+ segment (it shouldn’t be too much if the sample is representative). Did Gen Yers wake up one morning and discover online banking? And are you trying to tell me that a significant percentage of them shifted their preference from the branch and ATM? No way.  

2. We need to ask more specific questions. Whatever the reason for the tectonic shifts in preferences, the results of the study convince me that we researchers need to get a little more specific when asking about channel preferences. Specifically, we need to ask about channel preferences for specific types of interactions and transactions. Eight percent of consumers might say that they prefer to bank by ATM, but the reality is that they can’t do everything they need to (potentially) do with a bank through the ATM. 

3. The mobile number is out of whack. If asked, before I saw the results, to guess what percentage preferred the mobile channel, my guess would have been a lot higher than 1%. I would have guessed that it would have doubled from 3% to 6%. That number might seem to low to you, but keep in mind that only about 15% of US adults are using mobile banking. So 6% of 15% would mean that 4 out of 10 mobile bankers prefer the mobile channel to all others.  But the percentage didn’t double — in fact, it dropped. Very counter-intuitive.

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Toilet Paper And Online Banking

Bank Innovation Monitor released a study recently which proclaimed that “consumers show deep ‘love’ for online banking.” The study found that:

“Only 3.8% of Americans over the age of 18 are not aware of online banking. However, it is not just that the vast majority of consumers are aware of online banking or using many online banking functions; consumers “love” online banking. Which online banking service is most “loved” by consumers? That would be online bill pay, the stickiest and most-killer of all banking features.”

My take: Americans “love” online banking no more than they do toilet paper.

Let’s compare the data:

  • 96% of Americans are aware of online banking (source: Bank Innovation Monitor). 96% of Americans are aware of toilet paper (source: my unscientific estimate, based neither on surveys nor personal observations).
  • 100% of Americans who bank online can’t live without it (source: OK, I made it up). 100% of Americans who use toilet paper can’t live without it (source: yep, made that up, too).

Now, let me ask you this: Although you might be fiercely loyal to a particular brand of toilet paper (the reasons for which I will not now, nor ever, ask you about), do you “love” your toilet paper?

If the answer to that question is YES, click here.

If the answer to that question is NO, keep reading. 

Bank marketers need to be careful to not confuse usage/dependency with an emotional attachment.

If consumers “loved” online banking so much, then wouldn’t it hold that they would “love” the providers of that service, i.e., the banks?

But, as we all know, consumers don’t love their banks. Nor do they love online banking. It’s simply a convenience that many of us have grown to rely on, and would be unwilling to give up. But that attachment is far from something we would call “love.”

Consumers don’t love online banking. In fact, most don’t really care about financial services or financial services providers very much at all. I would venture to guess that average Americans spend more time figuring out what restaurant to eat out at on a Saturday night than they do figuring out which bank to do business with.

If consumers truly loved online banking, than providing a measurably better online banking experience should get many of them to switch banks, right?

Good luck pursuing that path.

Toilet paper advertising is probably a good role model for bank advertising.

What does toilet paper advertising try to do? It tries to get people to care about their decision. It tries to get people to see that the choice in toilet paper is important. And if it’s successful in doing that, then the advertising can persuade consumers that one brand is superior to another.

Final point: I hope the people who clicked on the link above came back to read the rest of the post.

Online Banking’s Looming Measurement Crisis

According to research done by Aite Group, generating sales is the most important business goal for banks’ online banking efforts. And an overwhelming majority of banks say that ROI is a critical measure for determining which features and functions they roll out on their sites. But nearly three-quarters of banks say that they can’t establish a correlation between profitability or performance and the introduction of many online services and tools.

Not sure what this tells you, but it tells me that online banking execs have a measurement problem. A problem that I think is only going to get worse over the next few years. Why?

1. The online channel is taking credit for sales influenced by other channels. There’s a big difference between “generating a sale” and “taking the order.” When I’ve mentioned that to online financial services marketers, the heads generally nod, but few firms seem to change measurement techniques or approaches to determine the difference.

2. Direct marketers are adopting net measurement techniques. Database marketers are increasingly trying to measure the incremental ROI of direct marketing investments.

3. Financial services marketers want to be integrated marketers. Research conducted last year by Epsilon found that more than 80% of financial services surveyed said that they have made a strategic decision to integrate their marketing efforts across channels.

What this adds up to is increased scrutiny of the sales performance of the online channel. As campaigns are increasingly executed centrally (to coordinate various channels) and the incremental performance of each channel is measured, then where the order is taken will become less important than which channel had the greatest influence on generating the sale.

Personally, I don’t think a lot of online banking groups are up to this measurement challenge. Sorry if this offends any Web analytics groups out there, but I find that many of them are focused solely on online data, and/or don’t have the statistical and testing skills needed to execute the kind of analysis that’s required here.

For some more thoughts on what online banking execs should do about this, and for some survey data on the priorities and performance criteria of online banking groups, please check out this research note on the Aite Group site.

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Online Banking Mind Model Study

Vox issued a report titled “Banking Mind Model Study: A Customer Experience Analysis of Consumer Banking Industry Websites.” According to the report:

“We compared the page elements and layouts of a carefully selected group of banking industry websites to create a composite website home page we call the Mind Model Representation.”

My take: Although this report falls far short of analyzing consumers’ online banking/financial services experience, and is seriously mislabeled (it’s hardly a “mind model” — it’s a model depicting the graphical layout of banks’ home pages), anybody involved with the design or management of their bank’s or credit union’s web site will find some interesting data in it.

Vox identified 15 different elements comprising banks’ home pages. A few things caught my attention regarding:

1) Blank space. On average,about one-third of site’s home page consists of unused or blank space. More interesting, however, is the range across banks. US Bank’s home page has the most unused space with almost half the page blank. Chase followed with about 45% of its home page consisting of blank space. At the other end of the spectrum, Wells Fargo had the least unused space on its home page, with just about one-quarter of the page blank.

2) Product/servce offers. Citibank and Wells Fargo allocated the most to product/service offers, with HSBC and National City allocating the least. Perhaps with so much of their home pages blank, it isn’t surprising that Chase and US Bank didn’t allocate very much space to product offers, either.

3) User tools. According to the report, when comparing the 2007 analysis to the 2006 analysis that Vox performed, allocation of space to user tools nearly doubled, which Vox attributes to an “increasing focus on customer experience.”

This should raise some questions for bank/CU eCommerce execs to ponder:

  • How does the unused space on our home page impact the user’s experience and perception of us? Why do other banks (i.e. competitors) have more/less unused space on their home page?
  • Does our current allocation of space to home page elements represent the user experience we’re trying to deliver or is more a function of home page politics?
  • Do we allocate enough/too much space to product offers or some other element at the expense of other elements?

Personally, I think Vox is overreaching by claiming that its analytical approach analyzes the “customer experience” (a term I find inappropriate, anyway, since it should really be plural, not singular). Instead, it adresses the “first impression,” which is still important. But bank/CU online channel execs will find the information that Vox has compiled interesting to compare and contrast.

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