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.

Customer Service in a Time of Considerable Uncertainty

Posted on June 18, 2020October 1, 2020Categories Research1 Comment on Customer Service in a Time of Considerable Uncertainty

Don’t be the problem, be the solution!
By Tery Spataro, @tery

Customer Service in A Time of Considerable Uncertainty
Photo credit: Toa Heftiba

I studied the behavior of bank customers for over seven years. COVID-19 crisis created an unexpected future for all of us. The customers of financial institutes are facing economic challenges, and they will need help with recovery planning. Good customer service is more important than ever. There is much uncertainty, which is adding to the anxiety and vulnerability customers are experiencing. I explain the causes of customer anxiety and vulnerability using my studies and data from other sources of consumer behavior.

The economic ambiguity created by COVID-19 led to many misunderstandings about consumer behavior. Think about the negative opinions bestowed upon families that were trying to plan household needs while experiencing social distancing. There is a misunderstanding around the act of toilet paper hoarding, which reveals circumstances not considered. Think about the Pre-COVID-19:

  • Customers worked out the home.
  • Children were going to school.

Social distancing created the need to plan out toilet paper usage. Mayonnaise is another sought after product that consumers could not get enough. Pre-COVID-19 lunches were purchased by people working out of home and students attending school. COVID-19 caught consumers off guard with no crisis planning.

Your customer service needs to take these realities into account.

In a COVID-19 world, there are continually changing circumstances. Most customers are not prepared for change. Adding to change of circumstances and vulnerability is unemployment. As of May 29, 2020, there are more than forty million people in the U.S. that are unemployed. (N.Y. Times, 2020). Many people were unprepared for this tremendous financial upheaval.

Understanding Their Fears Creates Better Customer Service

Customer service has changed since the COVID-19 crisis
The COVID-19 crisis has changed how consumers interact with companies.

I wanted to understand coping during the COVID-19 crisis. I launched my survey from April 17-April 23, 2020, and gathered 383 responses from U.S. consumers. Respondents were asked about their financial outlook for the next six months. An 11-point scale was used so that they can indicate their feelings between poor and good. Fifty-one percent of the respondents felt their outlook is weak, and forty-nine percent felt good. They were asked to indicate their feeling about the overall economy six months from now, 70% felt less hopeful about the general economy.

In the PreCovid-19 world, consumers were ready to embark on higher purchases. In early 2019, the U.S. unemployment rate was 3.9%. At that time, I asked thousand U.S. consumers to identify their next big financial event, of which forty-three percent said they would buy a house or vehicle requiring a mortgage or auto loan. Consumers were beginning to feel secure about the economy. Even in these good times, customer service was something companies needed to improve.

The COVID-19 circumstances made life dire for everyone in the U.S. and the world. Social distancing and self-isolation measures put in place to protect each other from getting or giving the coronavirus.

In the COVID-19 coping study, there are many reasons that impacted 383 respondents’ ability to cope. The change to living circumstances had the most significant effect, such as adjusting to social distancing (66%) and modifying behaviors and habits (54%). There are many challenges respondents experienced in coping during the COVID-19 crisis. Forty-one percent of the respondents identified with having to accept the loss of physical connection, while twenty-nine percent acclimated to working from home, and twenty-eight percent transitioned to shopping online.

These impacts changed not only the number of interactions with customer service staff, but the critical nature of those connections. How does a company provide customer service when the customer is stressed?

Other Surveys Agree: Customers Are Stressed

Correlating findings from a recent poll conducted from May 12-17, 2020, two-thirds of Americans do not expect their daily lives to return to normal for at least six months. Three-quarters of those polled are concerned about the second wave of coronavirus cases. (Poll. 2020).

Vulnerability is a challenge to the recovery for the U.S. economy, which will take longer because of ambiguity about the future. Consumer Reports is tracking how consumers are faring during the pandemic. Survey results show that many Americans are delaying planned purchases or abandoning those plans altogether. Fifty-seven percent have delayed a large home improvement project, 18% have canceled it outright. Elective medical procedures — are being delayed by 70% for concerns of COVID-19. (Brancaccio. 2020).

The customer service functions of travel, hospitality, and even health care companies have been the “make or break” touch point for these consumers.

Banks should prepare for the shifts in behavior of Pre-COVID-19 customers who preferred location, convenience, availability of branches, low to no fees, and a safe place to keep their money. These needs were essential to delivering excellent customer service.  Most importantly, banks will need to shift as a source of trust to help customers through these difficult times. Banks need to be the solutions instead of creating more anxiety for already overwhelmed and frightened customers.

I am pleased to be working with Frank Bria on a new study examining the behavior, attitudes, and sentiment of bank customers who are experiencing the challenges from the COVID-19 crisis. We’re studying how banks should react to changing customer sentiment to provide on-boarding, customer service, retention and loss mitigation strategies. In the coming weeks, Frank and I will share our findings.

Sources:

Poll, Marist. (May 20, 2020). Americans Concerned about Second Coronavirus Wave… Nearly Two in Three Don’t Expect “Normalcy” Before, At Least, Six Months. NPR/PBS NewsHour/Marist Poll Results & Analysis.

Brancaccio, David. (May 22, 2020). The Consumer Reports CEO on fighting for protections in our online world. Market Place.


Consumer Preferences in Digital Banking Trends 2020 post COVID-19: Coming Soon

Posted on May 21, 2020May 21, 2020Categories Research  Leave a comment on Consumer Preferences in Digital Banking Trends 2020 post COVID-19: Coming Soon

Our new research, Digital Banking Trends 2020, assesses the changing consumer preferences to use digital baking channels in a post-COVID-19 world.

In July 2020, we’ll be publishing research on changing consumer preferences in our new research: Digital Banking Trends 2020. We have asked consumers about their changing opinions after COVID-19 stay-at-home orders have forced many consumers to use digital and virtual options where they otherwise may not have.

Digital Banking Trends 2020
Consumer preferences are changing quickly in 2020.

Will these consumers continue to use those digital options after things return to normal? Or will they go back to “in person” options?

We’re excited to share this information with you very soon.

In the meantime, here are some other banking resources from The SaaS CX Group.

Adam Elliot on online account opening fraud.