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Five smart ways to bridge the physical-digital divide

As customers continue to move towards digital channels, we see the ongoing, dramatic impact on monetary transactions, “paying and receiving” or teller transactions. But for certain types of activity, branches remain the channel of choice.

So how should your digital and physical channels fit? What steps should you take to close the divide and create a more compelling experience for your customers?

As preferences change, it’s a mistake to assume most customers want to transact through digital channels alone. According to recent research by both Celent and J.D. Power, the number of consumers who prefer digital-only stands at just 6 percent. And while millennials have a stronger preference for digital, they come in at just 12 percent.

Surprisingly, the same surveys show that financial institutions can overestimate consumer preference for digital and underestimate it for an in-person experience.

Then comes a strong shift to the middle: 39 percent of customers bank digitally but prefer to address some banking matters in person. That represents a chance to enhance customer experience and establish deeper relationships with those who still use branches but migrate toward greater digital usage.

Trouble brewing in consumer shifts

Our surveys show that more than 85 percent of consumers still open deposit accounts in branches. There are exceptions: A few large organizations such as Chase have managed to shift about 30 percent to online. But for almost all others, this very much represents a work in progress.

The research reveals one surprise: the higher level of satisfaction among customers who use branch and digital services. There’s just something special about the richness of communication through personal interaction that digital channels cannot replicate. The J.D. Power study reveals that digital-only customers report significantly lower satisfaction—which translates to lower brand loyalty, less depth of relationship and higher attrition.

This is not an age-related issue. Whether millennials or boomers, customers who use in-person and digital channels together experience higher satisfaction.

Make no mistake: There is danger in complacency. Further, there’s no point in thinking that because most people still use branches (and personal experience creates higher satisfaction), there is no  compelling reason to change. We believe the opposite: Financial institutions must address the shortfalls in their digital channels more aggressively.

As more customers move to digital, the ability to easily interact, provide advice and sell more services drops. And unless something happens to change the experience, customers who migrate to digital channels will show lower levels of engagement and emotional connection with the bank. This poses a problem for community, mid-size and regional banks, which are less likely to have invested in the tools and infrastructure to fully support a rich, digital-centric experience.

The journey forward: addressing solutions

What should you do? We believe financial institutions should tackle five key initiatives:

1. Focus on the moments of truth

The first comes with the account opening and online account opening requires the most attention.

Focus on new customers is critical, not only because this is where they find the experience less fulfilling but also because satisfaction for digital-only declines precipitously over time unless you pay attention up front.

2. Improve your digital communication

Messages need to be delivered through the customers’ preferred channel; this proves especially important for digital only customers. Though 58 percent of customers prefer advice and guidance through digital channels—even if they opened the account in the branch—only 12 percent report receiving it that way.

3. Promote awareness and adoption

Ask yourself, “Are digital capabilities embedded within initial account opening?”

Every new customer should leave the branch with the digital app downloaded to their phone, have it activated, know how to use it and make a test deposit.

The same should hold true of service interactions. Do you show your customers how to do it on their phone? Do they leave confident in their ability to work things or do you merely tell them they can be done that way?

4. Make bold moves

Customers rarely notice gradual changes. Find opportunities to transform new account opening, onboarding and mobile app activation. They will more likely notice these efforts and experience their impact.

Furthermore, expand and promote features with the highest impact on satisfaction.

Whether we’re talking about account opening, consumer lending or other interactions, some features delight consumers more than others. Mobile check deposits,  state of the art a few years ago, now rank as mere table stakes today. Others, such as P2P payments, have low usage today but very high impact on satisfaction when used.

Knowing those leverage points will provide a focus for your new initiatives.

5. Know your metrics

As for one of the biggest shortfalls, we find that banks invest in new services but fail to manage the key metrics for success.

Consider these three key variables. The first is penetration: In mobile banking, for example, what percentage of customers have downloaded the app? Second is activation: Of those who’ve downloaded the app, who uses it? Finally, there is usage: How do they use it?

Without knowing these basic who-what-where metrics in detail for each feature, you will travel blind: investing in products and services without the data to successfully navigate choppy seas going forward.

Parting thoughts: Winning the game

You’ve heard it before: what Walter Gretzky taught his young son and future hockey great Wayne—“Skate to where the puck is going, not where it has been.” But that ice rink wisdom still applies in your arena of competition. Deliver the experience and service your customers want—that is, know where they are going—and you’ll succeed in helping customers reach their goal as you reach yours. You don’t need the Great Gretzky to tell you the value of giving it your best shot.

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David Kerstein is president of Peak Performance Consulting Group, which specializes in helping community and regional banks grow. He can be reached at [email protected].