Digital Banking During COVID-19 Surged. Will It Stick?

Posted on October 21, 2020October 30, 2020Categories Article  Leave a comment on Digital Banking During COVID-19 Surged. Will It Stick?
Digital banking during COVID-19 was unprecedented. What does the future hold?
Digital banking during COVID-19 was unprecedented. What does the future hold?

Before the onset of the pandemic, digital banking during COVID-19 surged, which in turn drove financial institutions to seek to create better consumer experiences. However, COVID-19 created an urgency by banking customers and left financial institutions struggling to understand how to serve their customer segments going forward.

A PWC study, completed before 2020, found almost 73% of respondents consider the customer experience an important factor in their purchasing decisions but particularly influential in healthcare (78%), banking (75%), restaurants (74%) and hotels (74%). The same survey found only 49% of U.S. consumers said companies provide a good customer experience at the moment. It found closing any customer experience gap requires finding that sweet spot — where technology complements the human element of customer experience without creating new frustrations. That perfect balance is still the goal.

Digital Banking During COVID-19 and After

The Digital Banking Post COVID-19: Digital CX Banking Report surveyed more than 500 banking customers in June, more than 135 days after the first documented COVID-19 case in the U.S., to explore and describe the mindset and behaviors of banking customers. We wanted to learn whether the pandemic changed customer needs and wants. What did they expect before COVID-19 hit and what are their expectations currently? Have customers changed their perceptions of digital banking since the lockdown?

We uncovered customer perception and behaviors and categorized them into three segments:

  • Traditionalists: Customers who prefer interpersonal contact at the branch and will likely return as branches re-open.
  • Transformers: Customers who used to prefer branch interactions but are willing to go digital now when “forced” to go digital during the pandemic.
  • Trailblazers: Customers who always preferred digital banking interactions and will continue to use online and mobile service and products.

Expectedly all three groups have displayed amplified use of digital banking during COVID-19, as all consumers had to rely on digital services with branch activity disrupted. All these segments represent some of your banking customers, which makes serving them all an ongoing challenge.

However, we found the Transformers, the most dynamic group. While most Traditionalists and Trailblazers enjoy a steady financial institution relationship, most Transformers do not.

Transformers (44% are 25-44 years old) are open to new experiences in banking but feel ignored at times and do not believe their institutions provides them with enough financial advice, which they sorely need and want, especially now. They will use online and mobile banking but are more likely to go into the branch to make a deposit or withdrawal, get cash or cash checks.

Financial institutions have a great opportunity with Transformers. For example, they favor a mix of digital and in-person interaction with their bank or credit union, which might make them receptive to a web chat or video teller meeting.

For banks and credit unions, Transformers seem well prepared, more enthusiastic and adept enough to move to more digital and self-service channels post-COVID-19, having out of necessity already used those channels.

For a more in-depth look at the Transformers click here for a free report preview; and click here to stay up to date with the latest consumer behavior in digital banking every quarter.

Digital Banking Trends Changing with the Circumstances

Posted on October 2, 2020October 2, 2020Categories Research  Leave a comment on Digital Banking Trends Changing with the Circumstances

Necessity may be the mother of invention but it can also solve banking problems in the midst of an emergency. Over the last four decades overwhelming circumstances accelerated financial technology evolution, with the latest crisis, the pandemic, fast-tracking the transformation of digital banking trends and banking customer behavior.

Before the 1970s, most banking took place during business hours with the aid of tellers and pens chained to desks. In 1977, Citibank invested some $100 million in introducing Citicard Banking Centers (featuring automated teller machines) throughout New York City. Nobody rushed to visit them until two 1978 massive snow storms helped increase ATM use by 20%. The positive response helped usher in a national ATM boom.

At the start of the 21st century, U.S. check clearance involved the paper checks completing a circuitous route back to the account-holder’s financial institution, mostly through a fleet of jets controlled by the Federal Reserve Bank and the banking industry. However, the tragic events of September 11, 2001, not only grounded air travel but halted the banking system. To prevent a repeat of that situation, in 2003 Congress passed the Check 21 Act, which mandated electronic clearing use check images.

Digital Banking Trends in the Time of COVID

Now in 2020, the arrival of COVID-19 and applied social distancing rules accelerated banking’s digital transformation by months, if not years, and elevated the online and mobile customer banking experience overnight. Even banking customers who preferred in person-banking before, became digital banking users when the branches closed.

Learn how customer service is changing because of COVID-19

Digital banking trends are changing with expectations of customers
Digital banking trends are changing with customers expectations.

It raised the question, what will banking customers expect from their financial institutions when the COVID-19 crisis ends?

The Digital Banking Post COVID-19: Digital CX Banking Report surveyed more than 500 banking customers in June, more than 135 days after the first documented COVID-19 case in the U.S., to explore and describe the mindset and behaviors of banking customers. We wanted to ascertain whether the pandemic changed customer needs and wants, and with it digital banking trends in general. What did they expect before COVID-19 hit and what are their expectations? Have customers changed their perceptions of digital banking since the lockdowns?

The Digital CX Group learned customer perceptions and behaviors and categorized them as:

  • Traditionalists: Customers who prefer face-to-face branch interaction and will likely return as branches re-open.
  • Transformers: Customers who previously preferred branch interactions but went digital during the pandemic.
  • Trailblazers: Customers who always preferred digital banking interactions and will continue to do so.

How Banks Should React to These Changes

Understanding the digital banking trends predicted by all these segments represents unending challenges for banks and credit unions to service. However, we found Transformers, the most interesting and unpredictable group. In a nutshell, the report discovered 44% of Transformers are 25-44 years old and are open to new banking experiences. They favor a mix of digital and in-person interaction. It is important to them that their banks or credit unions exhibit leadership. Transformers choose their financial institution for convenience, which can be a mix of location and digital offerings.

Figuring out who Transformers are and what they want figures heavily in forming the right customer strategy for financial institutions post-pandemic.

For a deeper dive into your customers click here for a free report preview; and click here to stay up to date with the latest consumer behavior in digital banking every quarter.