You can’t be the nation’s best bank and credit union marketer without keeping our finger on the racing pulse of the banking industry.

This week, I was checking out a research paper by Pegasystems called, “Moments of Truth in Banking.”  They surveyed 1,001 consumers and 50 business decision makers from retail banking organizations.

Online Service FrustrationSome Key findings include:

  • 90% of banking decision makers say customer service is an important or critical differentiator for their business.
  • 68% of banks think they understand their customers extremely well, BUT less than half of banking consumers feel the same way.
  • 72% of banking consumers have interacted with their bank in person and 56% of respondents feel this offered “the best service.” Although telephone is used by 68% of respondents, just 19% feel this offered “the best service.”
  • For 23% of consumers, when they receive poor service, their first reaction is to, “start looking for a better bank.” But when push came to shove: 1) Price/Rates/Fees; 2) Security Issues and 3) Convenience beat out Service Issues for why people would be most likely to move bank accounts.

One finding that really got me thinking was:
Banks are potentially underestimating the impact that digital disruptors could have on their business. One in three consumers would consider moving to a new, innovative provider in the future, but the majority of banking decision makers still see their main competition as traditional banking institutions.”

  • 36% of consumers stated that they, “would consider new innovative provider options in the future.”

The skeptic in me says that they will CONSIDER a faceless banking option, but aren’t ACTING on it.

I believe that digital disruptors are just that, disruptions … like a speed bump. You should slow down a bit and pay attention to what they are doing. But there’s no real market share concern there.

There is no substitute for face-to-face and real people helping to solve real, complex money concerns.

Best Online Only Banks of 2017But, Am I Right?
Ally bank is the 24th largest U.S. bank with $123 Billion in assets (0.72% national market share) and Discover Bank is the 29th largest with $91 Billion (0.56% market share).

The largest 100 banks range from $2 Trillion+ to $13.5 Billion

In the article “Online Banks Are Hot, Just Ask Goldman Sachs” published on in April 2016:

“Online-only banks were the only category of banks to gain share in the past decade among retail customers establishing or moving their primary banking relationships, according to TNS research. Online-only banks now attract approximately 12 percent of all new primary banking relationships in the U.S., compared with only 4 percent a decade ago, according to TNS.”

So, forget competing with the brick and mortar national, regional and super regional banks, right? Millennials do everything online and that is where your REAL competition is!

Not so fast, zippy! Don’t forget, 90% of bankers say that servcie is critical and 56% of consumers say that in-person provides the best service.

Let’s look closer:

  • Ally Bank assets have DROPPED 22.3% from 2014 to 2016
  • Discover Bank assets ONLY grew by 9.9% from 2014 to 2016.

Bottom line: I have yet to find a market where an online only competitor plays a significant factor. 

  • Should we keep asking the question in our market research? Absolutely!
  • Should we watch what online banks are doing and learn from their best practices? You bet!
  • Will people always want access to a human being when dealing with their money? To a certain extent, yes.
  • Can your team provide better, more personalized service to your customers than faceless options? You’d better!

Banking is truly unique. When you’re seen as simply a checkmark in the ol’ “Honey Do” list, a dreaded chore, a basic transaction, when price is the only thing that matters to someone – you know the stuff we DON’T make money on – then online banking has a huge advantage.

But when I found a car or home that I love and don’t know how I’ll afford it … when my debit card is compromised and I need a replacement today … when I get a new job … when I’m wondering how I’m going to pay for my kid’s college – or next week’s utility bill, I want a person that I trust. I want someone to empathize with me and help me sleep better at night. I want someone who is an expert, who will take personal ownership of helping me find a solution. I do NOT want a computer screen, I want a hand shake … and maybe a hug.

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