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.
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.