The COVID-19 pandemic has challenged traditional banking models and made the digital experience more significant. Even customers not accustomed to banking by smartphone, tablet or personal computer find themselves open to new channels to transact their financial business. Now financial institutions need to come to grips with how the pandemic changed banking and consumer behavior.
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 — how the pandemic changed customer needs and wants, and what are their expectations and perceptions of digital banking since the lockdowns.
The shift in consumer tendencies affected most industries worldwide, but especially banking. McKinsey & Co. found more than 75% of buyers and sellers now prefer digital self-serve and remote human engagement over face-to-face interactions. McKinsey also found COVID-19’s impact projects 15 to 20% of banking customers surveyed in Italy, Spain, and the U.S. expect to increase their use of digital channels post-pandemic.
Many financial institutions have yet to see this mindset shift translate into actual user behavior, perhaps due to limitations of their digital capabilities. Should these sprouting inclinations become banking’s new normal, McKinsey anticipates retail banking distribution picking up three years of digital acceleration in 2020 alone.
A DepositAccounts survey, published in September, also discovered most consumers are visiting their financial institution’s branches much less lately and turning instead to mobile banking apps or websites. They found over the previous 30 days, 91% of Americans banked at least once online or on a mobile app; over 40% of consumers are using their bank’s mobile app more often than pre-pandemic; and 52% of consumers visited physical financial institutions less during the pandemic.
Given this new customer leaning, financial institutions may elect to reconsider their revenue drivers, and seek new product introductions and/or updates of their offerings to include extra security, advice-giving services, and more analytics to help recognize relevant niches of potential growth. But how do they choose?
DCX studied customer perceptions and behaviors and categorized them as Traditionalists, who prefer face-to-face branch interaction and will likely return as branches re-open; Transformers, who previously preferred branch interactions but went digital during the pandemic; and Trailblazers, who always preferred digital banking interactions and will continue to do so.
All three clusters exhibited amplified use of digital services during the pandemic, which should come as no surprise. Consumers of all inclinations had to rely on digital services with physical stores and offices not an option. Banking was no exception. All three groups increased their digital banking use, and it is the nuances among these increases that this report will examine. Which habits are temporary, and which will become permanent? How should banks shift their products and services to prepare for the post-COVID world? The Digital CX Banking Report will provide guidance based on customer responses on what they expect and what financial institution should do to overcome concerns.