What does the retail banking ecosystem look like when the pandemic is over? How will it affect digital banking?
As you may, or may not, know the pandemic and its resulting lockdown on much of world has made me wonder about the fate of the retail bank branch. In my first post on the subject I speculated that the temporary lockdown would move more people to digital banking and reduce the need for a physical branch. I followed up that post with another post that discussed how the branch experience will likely change for the customer and how these changes might nudge more customers to digital.
Today, I came across a very informative article on CNBC titled, Coronavirus crisis mobile banking surge is a shift that’s likely to stick written by Ellen Sheng. In her article, she provides some very compelling data that show how consumer banking behavior has actually changed.
According to Fidelity National Information Services (FIS), which works with 50 of the world’s largest banks, there was a 200% jump in new mobile banking registrations in early April, while mobile banking traffic rose 85%.
“Once people begin favoring mobile-based account access, there’s no going back. After the current crisis abates and lockdown orders are relaxed, we expect more U.S. consumers than ever before will be using their mobile devices to handle a wide range of their banking and payments needs,” said Maria Schuld, division executive at FIS’s North America banking services group
The article goes on to cite a recent Novantas study that reports that only 40% of respondents plan to return to branches after the pandemic issues have all cleared. As a researcher, I don’t think that that entire 40% will stop going to branches, but even if we halve that number to 20%, that is still a huge number. Think about it, branch traffic reduced by 20%?
What does all of this mean?
- Digital Offering – banks need to make sure that their digital offering both via the web and via app are up to snuff. Failure to provide a robust digital product now, more than ever, can put a bank at a competitive disadvantage as consumers migrate to digital banking.
- Branches – If the predictions of lower branch traffic come true, what does that mean for the branch system? Will branches be closed, reduced in size or repurposed? Banks will need to evaluate the changing needs of the customer with the current branch investment.
- Call centers – The article also mentioned that many bank call centers have seen a significant increase in call volume, increased call volume will also likely continue as customers avoid banks and contact the call center to help with issues that they cannot seem to resolve electronically.
Many things have changed because of the pandemic and things will continue to change or some time. The key is to stay ahead of those changes as much as possible.
Overview provided by Peter Reville, Director, Primary Research Services at Mercator Advisory Group.