The New-Age Banker Challenge
Financial institutions that continue to ignore their customers’ technological delivery presumptions and sentiments do so at their own peril. Taking these preferences into account can decrease an institution’s risk of becoming an anonymous transaction engine, instead serving as an encompassing service provider that plays a central role in customers’ financial lives.
Raddon research demonstrates that the consumer marketplace can be segmented into three mutually exclusive groups based on consumers’ expressed sentiments toward financial services and financial service providers.
New-Age Bankers make up 45 percent of the consumer marketplace. They are the largest group of consumers who hold more favorable opinions toward newer financial service providers, such as Google, Amazon, Apple, PayPal and Square. In addition, most of these consumers are smartphone owners who prefer to conduct most to all of their banking business electronically, using an ATM, computer or a mobile device instead of going to a branch.
Tech-Oriented Bankers and Conventional Bankers are smaller in number but collectively represent 55 percent of the consumer marketplace. These consumers hold more favorable opinions toward traditional financial service providers – banks and credit unions – than they do of newer financial service providers.
Financial services delivery preferences distinguish these two groups. Tech-Oriented Bankers (30 percent of the consumer marketplace) are likely smartphone owners. To conduct their banking business, they either prefer to use a blend of high-tech and high-touch delivery or may consistently prefer digital channels over in-branch resources. In contrast to Tech-Oriented Bankers, Conventional Bankers (25 percent of the consumer marketplace) are less likely to own a smartphone and prefer to conduct most of their banking business face-to-face with a bank employee.
Another point of differentiation among the three consumer groups is their demographic composition. Sixty percent of New-Age Bankers are Gen Y or Gen X consumers – significantly younger than Tech-Oriented and Conventional Bankers. In addition, New-Age Bankers continually display lower levels of loyalty, as measured by a Net Promoter Score, to their primary financial institutions than older consumers.
Technology is the underlying force triggering younger consumers’ loyalty vulnerabilities. Driven by a desire for instant gratification, younger consumers display a ubiquitous reliance on technology. They continually use technology to communicate with others, gather information, seek entertainment, shop and purchase goods and services, and share their lives through social media. It is not surprising that New-Age Bankers would do business with a newer financial service provider if it offered them the services they desire.
For some time, financial institutions have tried to persuade their customers to conduct their banking business over less costly electronic channels to improve their operating efficiencies. Thus, the banking industry should not be surprised its efforts and customer behavior change initiatives have come to a level of fruition with consumers, including the Tech-Oriented Banker. However, the banking industry has a ways to go satiate the technological appetites of New-Age Bankers. It would be an erroneous assumption by any financial institution to believe they are immune to New-Age Bankers; they exist in all primary financial institutions’ customer franchises.
Today, financial institutions face a new challenge, one of digital engagement across all channels to enhance the customer experience. Meeting this challenge will require the continued development and rollout of new digital products and services, as well as the integration of the digital and in-branch experiences. Successful initiatives will ensure financial institutions remain encompassing service providers that play a central role in the financial lives of their New-Age Bankers and other customers.| Comments (RSS) |