Exploring digital and omnichannel banking
Customer Power: Banking is a Harris Interactive programme of research exploring the relationships that UK customers have with their bank. The first article in this series of four explored the relationship customers want to have with their retail bank. The second explored switching behaviour, and this,the third in a series of four articles, exploresthe impact of digital and omnichannel banking, which banks are the best at online and mobile banking, how banks compare against Amazon and PayPal, and channel preferences.
How device ownership is changing digital usage
Laptops are the most popular devicesfor connecting to the internet (for 70% of device owners), but connection via smartphones and tablets are experiencing the fastest growth.
Around twothirds of bank account holders now own a smartphone,compared to just under a third back in 2011. Similarly, tablet ownership is now at 40%, compared to 5% in 2011.
This change has occurred in a relatively short space of time, and with touchscreen quickly becoming the norm, there are significant implications for both how and why people access their finances.
How does digital banking fit with traditional channels?Although the branch and ATM are still the most widely used means of conducting banking transactions, they are closely followed by online. The mobile app has almost caught up with telephone banking, while social media remains the least popular platform for banking.
But it is when we look at frequency of use in the last week that weclearly see the changes in banking habits; greater numbers of consumers accessed their account via a mobile app than visited the branch and talked to someone.
It is therefore no surprise to hear about branch closures such as those announced by Lloyds Banking Group in October and their re-focus on technology-led branches instead. One banking chief executive has also said their busiest branch is the 07:20 commuter service into Waterloo.
So which banks do digital or mobile banking well?
First Direct, known as an online banking specialist,tops our ranking on overall quality of online banking, but RBS, Santander and HSBC are hot on its heels.
On the mobile banking side, NatWest – the first bank to offer an app – leads the way, followed by Santander, HSBC and Barclays.
How do banks compare against Amazon and PayPal?
Amazon is considered by many to be one of the best online retailers.
When we look at how well banks on average perform against Amazon, we see many similarities. In fact, the highest scoring bank regularly outscores Amazon on the most important elements, and by clearly leading the way on ease of use, speed and reliability, we can see why First Direct has topped our poll.
Nationwide also deserves credit for the way they have developed their money management tools and site personalisation; something with which other banks appear to struggle.
However, Amazon is far ahead of banks on tailoring its site to individual needs and preferences, and also in the range of services it offers; elements that banks will need to review and address.
It is a similar picture when comparing the banks’ mobile apps to PayPal. The things that matter most – such as ease of use, speed and layout – are very similar.
However,the PayPal app rates more highly on several elements including security, reliability, range of services and personalisation. PayPal can now be used in shops and users have been able to pay their friends using the app for quite some time without an onerous registration process.
Channel preference in managing finances
Where consumers are making transactions – such as checking a balance or making a payment – online is the preferred channel for around 60%.
Although mobile is relatively low amongst the general population, it is used by over a third of regular mobile app users for simple transactions.
The branch retains its preferred channel status when any sort of advice or support is needed. Taking out a loan is still one of those situations for the vast majority, with 60% claiming they would still want to do this in branch (or face to face). Saying that, around a third prefer to take out a loan online, perhaps because this channel allows them to check how competitive it is, alongside speed and convenience. Taking out a loan via a mobile app has only recently become an available option, so again it will take time for people to consider this to be the norm.
The more advice and support that is required, the stronger the pull is towards the branch. If we look at mortgages, where the process is more complex,almost three quarters say they would still prefer to undertake the transaction in branch.However, online has grown over the past five years, and could continue to do so, as people become more accustomed to buying an array of financial products this way.
As noted earlier, the decline of the branch has been well publicised, but our data shows its role certainly is not dead. In our view, it just needs to reinvent itself as a hub for advice and financial support.
Touchscreen technology is growing at a rapid rate, with wearable tech such as watches likely to gain in popularity.
Online banking has reached maturity, and consumers are making everyday banking transactions – even payments –online.
The banks fair well digitally, in terms of customer satisfaction, compared to the likes of Amazon and PayPal. However, the biggest area for improvement is increasing perceived levels of personalisation/ tailoring to individual needs.
Ultimately, as long as people need advice and support with their finances, there will always be a role – in some shape or form – for the branch.
About Harris Interactive UK
Harris Interactive UK is a full service, consultative custom market research agency working internationally out of offices in the UK and Europe. With in-house expertise covering all areas of research design, implementation, analysis and reporting, it has particular strengths in loyalty and brand.
For more information, please visit the Harris Interactive UK website.
Customer Power: Banking is a Harris Interactive programme of research exploring the relationships that UK customers have with their bank. The team comprises Debbie Senior – Senior Consultant, Phil Brooks – Financial Services Research Director, and Georgiana Brown – Financial Services Research Manager.