Delivering a great customer experience is never straightforward for banks. In most developed markets at least, gone are the days of waiting in line during your lunch hour to deposit a check and get some cash for the week. But there is still ample opportunity for financial institutions to annoy their customers with clunky service provision.
“Experiences that are easy, reliable and efficient create stronger loyalty,” notes Bain & Company in a report on Customer Behavior and Loyalty in Retail Banking.
To summarize one of the key findings – mobile is less annoying than branch or telephone channels for routine transactions. For example, the survey found in the US that a routine branch visit is 2.4 times more likely to “annoy” than a routine mobile app interaction. On the other hand, mobile apps are far more likely to “delight”.
This shows up in the Net Promoter Score (NPS) customer loyalty metric, with the biggest factors affecting this score being the branch experience, the number of branch interactions, and the online/mobile experience.
But it’s definitely not just a case of investing in “delightful” mobile over the “annoying” branch. Firstly not everyone is getting it right, showing that a great experience cannot always just be bought. “Some banks excel far more than others in using mobile to delight. Those leaders and top mobile performers in other industries raise the bar for all banks,” notes the report.
Second, branch visits and mobile interactions are not directly correlated – for every 100 mobile interactions, there are only 16 fewer branch visits. By that measure, overall interactions are on the rise, producing more ways for the bank to annoy or delight.
“Banks cannot rely exclusively on mobile, of course,” notes the report. “Human interactions still offer a means to excel in customers’ eyes, and those customers who use both physical and digital channels still tend to be more loyal and more valuable to their primary bank.”
What’s clear is that a joined-up omnichannel approach produces the greatest loyalty. Bain’s own research in the past showed people who use both digital and physical channels have an NPS 16 percentage points higher than customers using digital only channels and 22 points above those who rely solely on physical channels.
And this clearly plays out favourably for banks’ bottom line.
The previous study found omnichannel customers hold an average one extra product with their primary bank than digital-only customers, and 1.3 more than branch-only customers.
Meanwhile, the latest report indicates that customers who use a bank’s mobile channel a lot are 40 percent less likely to switch compared to those who rarely use this medium.
“Conversely, customers who use only branches frequently are almost three times more likely to switch banks as customers who rarely use branches,” notes Bain & Co. Don’t just take Bain’s word for it – Citi’s head of digital quoted in Finextra last week, said 60% of product purchases take place in branch, but those customers who use digital and physical channels combined show the same % increase in NPS as seen in Bain’s survey. Powerful statistics from a global giant, underpinning that the consumer drives strategy.
People who use both digital and physical channels are also less likely to go elsewhere for value-add products. So-called ‘hidden defection’ drives down profitability as customers seek alternatives for higher-value items, such as a mortgage, or credit card.
Mobile and branch cannot be seen separately – together they can work to improve loyalty.