As customer preference shifts from traditional branch and ATM transactions to easier, faster channels such as Web and mobile, it is becoming more and more difficult for banks to measure the impact this shift has on their organizations.
While most financial institutions (FIs) possess an abundance of data that illustrates how their branch network, Internet banking and call center are performing, many lack the mechanism to create a comprehensive view of how these channels are interrelated. For example, do banks with higher adoption of Internet banking and/or mobile customers have fewer branch transactions as a result? Do higher mobile and/or Internet banking adoption rates cause higher or lower volumes in the call center? Or, is there any correlation between a bank’s size and the adoption rates in its remote channels?
To help us answer these questions and analyze the impact of transactions across channels, Cornerstone Advisors created an Integrated Channel Scorecard and plugged in volume data from a recent survey of mid-size banks (between $1 billion and $40 billion in assets) conducted for the latest edition of The Cornerstone Report. When evaluating this data, adoption rates for Internet banking and mobile played a big part in helping us understand how different channels affect one another. For clarity’s sake, adoption is defined as the number of customers who are actively using the product, not just those enrolled. When looking at varying adoption rates for both Internet banking and mobile, we found these interesting items:
Size of the Organization: Banks with smaller asset sizes and branch footprints are more successful with both Internet banking and mobile adoption. The lowest performing banks in terms of Internet banking adoption average roughly $6.5 billion in assets with 86 branches, whereas their higher performing counterparts average $2.2 billion with 39 branches. Likewise, when looking at mobile adoption, banks with the highest adoption rates average $1.3 billion with 41 branches. Lower adoption banks averaged $2.8 billion with 64 branches. So, clearly, smaller organizations have been much more effective with rollout and ongoing usage among the customer base.
Adoption Rates: High performing banks are more than just moderately better than their lower performing peers, as adoption rates for both Internet banking and mobile are roughly double. Clearly this has to do with the fact that some organizations are just more effective at getting customers into Web and mobile products.
Teller Transactions: We were expecting banks with high adoption rates for Internet and mobile banking to have fewer teller transactions than their peers; however, the dramatic difference between high and low performers surprised us. Banks with high Internet banking adoption rates have 27% fewer teller transactions per branch than their lower performing peers, while banks with high mobile adoption rates have just over 50% fewer teller transactions than peers.
Call Center & Voice Response Unit (VRU) Transactions: The volumes coming through these channels are interesting in that high adoption rates of Internet banking and/or mobile have virtually no effect on the number of calls placed to the call center. However, banks with high adoption rates for mobile banking have nearly 15% more VRU transactions than their lower mobile adoption counterparts. This is likely the result of customers having effortless access to both of these passive channels utilizing the same device.
Staffing: For banks with higher Internet banking adoption rates, there is virtually no difference in the amount of staff required to support their remote channel customers compared to peers. However, banks that have high mobile banking adoption rates support 55% fewer customers per dedicated full time employee than their lower performing peers. This is likely due to the fact that, as previously mentioned, these higher performing mobile adoption banks are smaller and find it more difficult to scale when compared to larger banks. Remote deposit capture is virtually eliminated as a staffing factor as over 90% of bank participants included in the study don’t even offer it.
One of the most interesting findings was that, contrary to popular belief, there seems to be no direct correlation between the usage of Internet banking and mobile banking. Higher adoption of Internet banking by the customer base does not translate to higher adoption of mobile banking, and vice-versa. This is surprising since current system requirements force mobile enrollment through Internet banking.
However, the key takeaway is that mobile transactions appear to be having the greatest impact in transactions through other channels. While broad adoption numbers for mobile are rapidly increasing, this trend should only continue, further validating the need for banks to conduct mandatory, periodic reviews of their integrated delivery channels. A formal scorecard will help banks outline their sales and customer service goals by channel and determine if they are effectively meeting these goals.
Mr. Jones is a senior consultant at Cornerstone Advisors, Inc., a Scottsdale, Ariz.-based consulting firm specializing in bank management, strategy and technology advisory services. He can be reached at firstname.lastname@example.org.