BAI SPECIAL REPORT I
APRIL 2015
Sponsored by:
Digital Banking and Analytics:
Enhancing Customer
Experience and Efficiency
Consumers Now Expect Digital Banking Services to Power their
Financial Needs and Goals
Consumers are accelerating their adoption of new technology, which is one key driver for FIs’ shift to
digital banking. Also important is the influence of leading retailers on consumer expectations. By
engaging customers in superior buying experiences, these retailers are conditioning customers to
expect the utmost in convenience and personalization. As a result, customers now expect the
same–or better–from their FIs.
Results of the recent BAI Consumer Digital Banking Survey demonstrate that consumers highly value
digital banking services, both in how often they use these services and how they use them. Forty
percent of respondents use online banking at least five times a month, and 22 percent use mobile
banking with the same frequency. In addition, 43 percent reported using online bill pay at least twice
a month. In fact, many respondents indicated online or mobile is their preferred channel for a variety
of relatively sophisticated tasks. In addition to the 66 percent who prefer these channels for
transferring funds, 46 percent prefer them for managing investment accounts and 18 percent even
prefer them for resolving an issue with an account. (See Figure 1 for more.)
The proliferation of technology and growing consumer engagement with
all things digital are changing many aspects of customer behavior, from
product research to buying patterns to banking. Consumer expectations are
growing, too: consumers now expect a seamless, high-quality experience
across all digital channels, including online and mobile. Financial Institutions
(FIs) are responding to consumer demand by providing these channels and
developing new systems and features to satisfy customers. They’re already
reaping some of the rewards of digital banking capabilities, but much of
digital banking’s transformative potential remains unrealized.
Digital Banking and Analytics: Enhancing Customer Experience and Efficiency
1
With consumers
growing accustomed
to first-rate digital
experiences, they
are raising their
expectations of
their FIs.
Still, consumers want more. Although satisfaction rates vary by bank size, more than 40 percent of
respondents feel neutral, dissatisfied or extremely dissatisfied with mobile banking, and more than
20 percent feel the same about online banking. (See Figure 2 for detailed data.) Perhaps most
important for FIs, respondents indicated they would switch to a new FI if it offered innovative products
and services. This mindset is shared by 38 percent of 18-to-20 year-olds, nearly half (48 percent) of
21-to-24 year-olds, 40 percent of 25-to-34 year-olds and 23 percent of people 35 and older.
FIGURE 1
SELF-SERVICE IS PREFERRED METHOD BY BANKING ACTIVITY
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Checking
balances
Transferring
funds
Initiating a
bill payment
Withdrawing
funds
Making bank
loan/credit
payment
Managing
investment
accounts
Applying for
a bank loan/
credit
Opening or
closing an
account
■ Mobile ■ Online ■ ATM ■ Phone (Live Agent or IVR)
10%
5%
54%
18%
7%
4%
55%
11%
7%
2%
49%
10%
2%
45%
12%
3%
7%
3%
41%
8%
8%
2%
39%
7%
Solving a
problem with
an account
25%
2%
14%
4%
Making
a deposit
2%
20%
14%
8%
8%
2%
19%
4%
9%
2%
16%
3%
FIGURE 2
CONSUMER SATISFACTION OF TECHNOLOGIES OFFERED BY PRIMARY FINANCIAL INSTITUTIONS
■
Extremely satisfied ■ Satisfied ■ Neutral ■ Dissatisfied ■ Extremely dissatisfied
24% 32% 38% 3% 3%
Mobile Banking Satisfaction Online Banking Satisfaction
Large
Regional
Community
CU
0% 20% 40% 60% 80% 100%
16% 32% 47% 2% 3%
22% 19% 53% 4% 2%
23% 20% 52% 2% 3%
40% 40% 15% 2% 3%
0% 20% 40% 60% 80% 100%
33% 44% 18% 3% 2%
36% 35% 25% 2% 2%
44% 30% 19% 1% 4%
Furthermore, customers are relying on digital banking services to meet their financial goals. Nearly
two-thirds (66 percent) of consumers say that personal financial management tools are important
digital offerings from their banks, according to an ATKearney survey.
1
Mobile banking users regularly
check their account balances and commonly elect to receive balance alerts, either via text message,
according to a Federal Reserve survey. If their balance or available credit is too low, they will forego
large purchases.
2
Taken together, these trends point to an important conclusion. Consumers want and expect FIs to
learn their preferences, just as online retailers do, and to go one step further to understand their goals.
Digital Banking and Analytics: Enhancing Customer Experience and Efficiency
2
FIGURE 3
NEAR TERM INVESTMENT PRIORITIES (12-24 MONTHS)
40%
35%
30%
25%
20%
15%
10%
5%
0%
Mobile
banking
Customer
acquisition
(deposits,
credit,
investments)
Regulatory
compliance
processes and
technologies
Technology
optimization
Branch
network
optimization
Core systems
upgrade,
replacement
or integration
Customer
service and
satisfaction
Channel
optimization/
integration
■ Community ■ Super Community ■ Regional ■ Super Regional ■ Large
30
18
30
28
22
33
18
22
22
15
27
35
22
14
24
23
24
24
20
13
15
23
24
28
22
23
23
11
14
27
21
28
11
18
17
8
20
27
23
27
FIGURE 4
CUSTOMER INTERACTIONS WITH FINANCIAL INSTITUTIONS
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Branch
Online Mobile
ATM
Call Center
Remote Deposit
Capture (RDC)
Online
Bill Pay
P2P
Payments
Mobile
Bill Pay
■ Community ■ Super Community ■ Regional ■ Super Regional ■ Large
47
Customer Interactions by Channel Customer Usage of Digital Services
38
33
35 35
19
21
23
21
19
7
10 10
12
10
13
14
17
16 16
13
17
17
15
20
29
28
32
34
37
13
10
12
16
19
7
10
13
17
17
6
15
12
12
16
Financial Institutions are Making Progress but can also
Benefit from Greater Digital Investments
FIs of all sizes recognize the importance of expanding their digital services and are prioritizing these
investments. The BAI Retail Banking Outlook Report, based on a survey of FIs, revealed mobile
banking to be a key short-term investment priority. (See Figure 3 for more.) Although FIs across the
size spectrum indicated the branch remains the most popular channel, they also reported substantial
usage of online bill pay, person-to-person (P2P) payments, mobile bill pay and remote deposit
capture (RDC). (See Figure 4 for more.)
Digital Banking and Analytics: Enhancing Customer Experience and Efficiency
3
The number of FIs currently offering key mobile banking features, from checking balances to bill
pay, further emphasizes the importance of this channel, as does the variety of new features FIs are
planning to introduce. (See Figure 5 for more.) Although no one new feature stands out as the
overwhelming favorite, P2P payments, balance transfers to and from accounts at other FIs and the
ability to open deposit accounts are all attracting support. However, some FIs still lag behind in
certain aspects: 22 percent are still planning to introduce RDC to mobile banking, 21 percent are
planning to offer customers 360-degree views of their accounts and 16 percent are planning to add
alert features. Additional FI investments in digital capabilities can both build on this progress and pay
off substantially in multiple ways.
FIGURE 5
CURRENT MOBILE BANKING FUNCTIONALITY PROVIDED BY FINANCIAL INSTITUTIONS
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Checking
balances
Balance
transfers
between
accounts
within the
bank
Bill pay
Alerts
Real time
posting of
transactions
Remote
deposit
capture
(RDC)
360 degree
view
Balance
transfers
between
accounts at
another
bank
P2P
payments
Ability to
open deposit
accounts
■ Report 2, 2012 ■ Report 2, 2013 ■ Report 2, 2014
Ability to
open loan
accounts
Live chat
with
customer
service rep
7
6
4
8
9
6
10
14
11
26
22
16
22
28
28
32
32
32
50
39
23
32
40
33
66
67
74
70
75
65
78
86
82
95
97
93
Digital Banking and Analytics: Enhancing Customer Experience and Efficiency
4
FIGURE 6
FUTURE MOBILE BANKING FUNCTIONALITY
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
■ Report 2, 2012 ■ Report 2, 2013 ■ Report 2, 2014
Remote
deposit
capture
(RDC)
36
45
22
Balance
transfers
between
accounts at
another
bank
26
30
25
Alerts
28
28
16
P2P
payments
36
28
34
360-degree
view
26
25
21
Ability to
open deposit
accounts
26
22
25
Bill pay
32
21
14
Balance
transfers
between
accounts
within the
bank
24
19
8
Ability to
open loan
accounts
20
19
15
Checking
balances
22
19
6
Live chat
with
customer
service rep
15
16
17
Real time
posting of
transactions
17
15
13
Expanding Digital Banking Generates Even Greater Opportunities
Clearly, offering full-featured digital banking services can increase customer satisfaction for FIs, but
doing so can also help them reach other business goals. One of the most immediate advantages is
reduced costs. The BAI Retail Banking Outlook Report survey found that 41 percent of FIs identified
migrating customers to online and mobile channels as an opportunity to reduce expenses. With the
premium customers place on these channels, FIs have a rare opportunity to make investments that
can increase customer satisfaction and control costs.
Another important business goal is customer acquisition; 19 percent of FIs consider it a critical
business challenge, according to the BAI Retail Banking Outlook Report survey. Well-developed
digital channels create opportunities for FIs to address this challenge as well as increase their share
of wallet and expand their market share, which 28 percent and 33 percent of FIs, respectively,
consider priorities. (See Figure 6 for more.) The foundation of these opportunities is the data that
digital channel transactions generate on customer behavior, such as buying habits. This data, which
is objective and gathered without human intervention, can show how customers behave throughout
all channels. When data from multiple channels is combined, FIs can see a clearer, more complete
picture of their customers.
With an improved understanding of their customers, FIs can personalize the customer experience and
recommend new products and services, both of which aid customer retention. These advancements
can, in turn, drive adoption of digital banking services, thereby improving FI efficiency, and attract
new customers, especially those in younger demographics.
Right now, many members of the Millennial generation, which is particularly partial to mobile banking,
are selecting their primary banking relationship.
3
FIs effectively addressing that preference can capture
these customers just as they approach the years during which they’re most likely to need mortgages,
car loans and other financial products. Data can provide insight into customers’ emerging needs, so
FIs that focus on improving digital channels today can potentially reap rewards for years to come.
Data and Analytics are the Engines of Customer Insight
and FI Growth
Digital banking channels give FIs access to customer data that is generated in real-time and is
unprecedented in its amount and detail. That data can catalyze FIs to improve their results, but it also
presents challenges, including combining information from disparate sources and detecting patterns in
massive datasets. Therefore, FIs are likely to find sophisticated but easy-to-use analytics tools to improve
customer experience and to compete with global banks who will master analytics capabilities.
4
The best analytics programs help FIs thoroughly understand their customers so they can design
products and services and target them to the customers most likely to buy. These tools can also
facilitate more efficient customer service in the increasingly omnichannel environment. For example,
customers no longer have to repeat their problem to a call center agent after attempting to resolve it
themselves online. Instead, the agent sees what the customer has done and can quickly clear up the
issue. This level of service matters to customers, even those who love to use digital channels. The BAI
Consumer Digital Banking Survey shows that 48 percent of 21-to-24 year-olds believe high-quality
personal service is more important than financial expertise, and 44 percent of 25-to-34 year-olds and
37 percent of those 35 and older feel the same.
Data can identify
emerging customer
needs, and that
power magnifies
the importance of
investing in digital
channels today.
5
Digital Banking and Analytics: Enhancing Customer Experience and Efficiency
With analytics tools providing real-time decisioning of personalized communications to customers
who are in-session, FIs can accelerate progress to simultaneously improve satisfaction, revenues and
profits. As FIs develop and execute on their omnichannel initiatives, high-quality analytics tools
become essential.
Customer Focus Improves Digital Channel Adoption
and Satisfaction
In order for FIs and customers to enjoy the full set of benefits that advanced, digital banking makes
possible, FIs need to remain focused on their customers. Some need to begin offering mobile
banking; in fact 16 percent of consumers reported that they adopted mobile banking because their
FIs began offering it.
5
Customers who don’t use mobile banking are most frequently concerned about
security and the technology being too difficult to use.
6
Therefore, FIs could increase adoption of this
efficient channel by educating customers about how to use mobile banking and why it is safe.
Offering and increasing the functionality of personal financial management tools is also important.
FIs often design digital initiatives based on their needs rather than their customers’ needs.
7
Or, FIs
separate digital into its own department, which prevents digital banking from harmonizing with other
channels.
8
A better approach is to think about the customer experience and to remember that when
customers think about their FI relationship or need service, they don’t distinguish among channels.
With customers expecting their FIs to fully understand their financial needs and to provide product
and service recommendations, analytics tools with 360-degree customer views and predictive
capabilities can prove highly valuable.
As FIs broaden and improve their digital banking offerings to meet customer demand, they can
operate more efficiently, deepen their relationships with customers and acquire new customers.
The first step in achieving these benefits is recognizing what customers want that they’re not currently
receiving, a task made possible by integrated marketing automation and advanced customer
analytics tools. Then comes understanding how to integrate innovative new features into omnichannel
enterprises so that they generate convenience and value. It’s those FIs that take these steps that will
be best positioned to realize the full potential of digital banking.
When FIs develop
digital banking channels
with a keen focus on
their customers,
everyone benefits.
Digital Banking and Analytics: Enhancing Customer Experience and Efficiency
6
Thank you to our sponsor
SAS is the leader in business analytics software and services and the largest
independent vendor in the business intelligence market. Drawing on 35 years of
experience in financial services, SAS helps banks, credit unions, lenders, capital
markets firms and other organizations address critical business needs. More than
3,500 financial institutions worldwide use SAS
®
solutions, including over 90 percent
of the top 100 global banks.
SAS provides a suite of customer analytics solutions that expand the reach of the
marketing function across the institution, giving banks the power to find the most
profitable growth opportunities, take the best marketing actions and maximize
cross-business impact.
— Focus on the customers, segments and offers that will generate additional
revenue with the highest return on marketing investment (ROMI).
— Optimize every customer interaction across every channel in real time to
grow customer lifetime value (CLV).
— Deliver a consistent customer experience that aligns products, channels,
sales and service through a complete picture of customer relationships.
Learn more and discover our white papers and webinars: sas.com/banks
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© 2015. CONFIDENTIAL.
The insights described in this whitepaper are the intellectual property of BAI and shall not be reproduced without the express written permission of BAI.
1
http://www.atkearney.com/digital-business/ideas-insights/article/-/asset_publisher/dWxykCQaJmh5/content/banking-in-a-digital-world/10192
2
http://www.federalreserve.gov/econresdata/consumers-and-mobile-financial-services-report-201403.pdf
3
http://www.pwc.com/en_GX/gx/banking-capital-markets/publications/assets/pdf/Primed_for_the_digi_tipping_point_Layout_3-1.pdf
4
http://www.pwc.com/en_GX/gx/banking-capital-markets/banking-2020/assets/pwc-retail-banking-2020-evolution-or-revolution.pdf
5
http://www.federalreserve.gov/econresdata/consumers-and-mobile-financial-services-report-201403.pdf
6
http://www.federalreserve.gov/econresdata/consumers-and-mobile-financial-services-report-201403.pdf
7
http://deloitte.wsj.com/cio/2014/11/20/digital-banking-give-customers-what-they-want/?mod=wsjcio_hp_deloitte
8
http://www.bain.com/Images/BAIN_BRIEF_Building_the_retail_bank_of_the_future.pdf
