What Banks Are Missing In The Digital Enablement Game

For years, financial institutions have relied heavily on face-to-face interactions at the bank branch in order to determine the financial needs of their customers.

The couple that just got married may soon be looking into a mortgage. The family with a baby on the way may want to start a new savings plan.

But today, banks are struggling to make these complex decisions because, in many branches, customers are nowhere in sight.

It’s not that customers are completely ditching bank branches, but with the increased usage of mobile and online banking, customers are heading to the branch less frequently than they were years ago, Michael Abbott, digital lead of North America financial services for Accenture, explained.

Banks are facing the challenge of knowing what they want to do to reach their more digitally-savvy customers but not exactly knowing how to accelerate.

It’s an ongoing tension between want and capability.

Abbott said financial institutions have to not only step out from what they’ve been doing for the last 50–100 years but also look at things from the customers’ perspective to see where value can be added in a way that keeps them engaged, while also making business more profitable.

Accenture’s 2016 North America Consumer Digital Payments Survey revealed that 66 percent of consumers characterize their relationship with their primary financial institution as purely transactional.

Though Abbott believes banks have done a fantastic job of developing online and digital customer experiences, he said they still must figure out how to turn those experiences into something that has value beyond just checking an account balance or moving money around.

How can banks truly do more?

Transactional To Valuable 

In many cases, customers have pretty simple expectations from their banks.

Provide the intended financial service in a way that’s secure, efficient and painless. Some may argue that meeting these expectations doesn’t require a true relationship with the financial institution.

Abbott admitted that the idea of bank doing more can be a turn-off to some customers, but when meaningful and relevant value is there, then it can become what customers want.

When thinking about an Amazon experience, where searching for a product brings up a list of all the other products a customer might be interested in, Abbott said a similar offering can be offered by banks.

For instance, a bank could look at a customer’s spending pattern and present a relevant offer online or in their mobile banking app.

“It’s about using the intelligence of what they have to not cross-sell people or be in their face but to subtly provide that extra benefit to them,” Abbott explained. “I think, in that way, consumers would want that, but if it comes down to that you’re just going to put another banner ad in the mobile app, then they probably won’t.”

Breaking Down The Silos

Financial institutions have the opportunity to use capabilities, like Big Data, to figure out the self-service cross-sell space and better understand the patterns and behaviors of consumers. Abbott said a significant challenge for banks going forward will be taking a digital approach to do what’s been done naturally in branches for almost 100 years.

The relationship banks have with consumers today is very much omnichannel, and digital has to be a part of the mix.

But consumers tend to want to keep certain companies and their services in very separate boxes, which can make it harder for banks to deliver enriching experiences in new ways.

Ecosystems can easily be siloed based on what specific things they offer a consumer.

Banks can only do banking, Facebook is only for social networking, WhatsApp is only for messaging — rarely do customers want to mix it up.

But what Accenture has seen through its research is that mixing it up is not impossible, but it has to be done well and the value must be there for customers.

Making Mobile Matter

Mobile payment adoption is a great example of a space where the value-add still has a long way to go.

“The good news is that we’ve advanced with the technology. The challenge is that, even though awareness is at an all-time high for consumers that they can use their mobile phone to pay at the point of sale (56 percent), only 14 percent are actually using it,” Abbott said.

When Accenture looked at the year-over-year increase in mobile payment usage from 2015 to 2016, there was actually no change at all.

The obvious answer to why this is happening is that there’s not enough merchants that accept mobile payments; therefore, it’s not prevalent, and consumers can’t use it everywhere.

But in digging deeper into the problem, it turned out that only 2 percent of the respondents to Accenture’s study said it was an acceptance issue.

“Our study found the lack of value is the number one reason why consumers haven’t adopted mobile payments … 40 percent cited it as the top reason,” he explained.

“They don’t see the incremental value in using their mobile phone when all we’ve done is taken a piece of plastic and put it on the phone. It’s like playing an Atari game on an Xbox.”

Though it may be functional, customers are often left wanting more.

The True Cost Of Value

It’s easy to equate more value with offering more rewards or discounts.

But that’s not always the case.

Abbott pointed out that value, especially when it comes to using mobile wallets, may not be what we think it is.

In studying consumer shopping behavior in-store, Accenture observed that many customers use their mobile phones to access a banking app to check their account balance before proceeding to the checkout.

It’s a logical conclusion, Abbott explained. Displaying the account balance of a debit card that’s loaded in a consumer’s mobile wallet is a simple change that could help drive mobile payment adoption.

He noted that 80–90 percent of the traffic on mobile banking apps is people checking their balance, which means that banks are just one API away from losing a significant portion of the traffic on these apps.

Looking 10 years from now, Abbott doesn’t believe we’ll still be having this same conversation about mobile wallet usage.

“I think it will break wide open,” he said. “With the opening of the banks in Europe — assuming more information will go into mobile wallets and other form factors to open up payments — it’s going to unleash a whole different set of innovations that may — and most likely will — make their way back around the world.”

“I’ll leave it to the pundits to figure out whether it’s a good thing or bad thing, but without a doubt, what it is doing is unleashing an incredible amount of innovation around the payments ecosystem in Europe,” Abbott added.

While the world continues to watch the impacts to Europe’s banking landscape as a result of the Payment Services Directive, Abbott said the markets will continue to figure out how to drive greater value in mobile wallets going forward.

“We’re actually going to see payments become not more visible but invisible, and the value become what drives the adoption of payments.”