This post is part of Gallup's ongoing series on the shifting landscape for financial institutions. It provides insights into channel optimization, emerging customer behaviors and preferences, product penetration and relationship growth, engaging the most critical affluent and business customers, and reshaping banks' overall value proposition.
I recently read an article in one of Dubai's local English-language news outlets touting a multinational bank's regional launch of a new mobile banking app that promised to serve as a "virtual" branch for its customers. Shortly after, I read a separate article on The Motley Fool's website titled "This Technology Will Save Banks a Bundle," in which the author said, "As banks like PNC and Bank of America close branch locations, mobile banking may help them hang on to customers."
This is dangerous thinking; here's why:
It is true that, more and more, bank customers use the convenience of the Internet and mobile devices to make routine transactions. A recent Bank Administration Institute study found that, for checking balances, transferring funds, and even making loan payments, much of the activity has moved from the bank branch to virtual banking. The same study noted, however, that when it comes to applying for credit or opening or closing an account, customers of all stripes still prefer the branch.
Gallup found similar results in our most recent U.S. Retail Banking survey when we asked respondents who had opened an account in the last six months where that transaction had occurred. Even among those who visit a branch less than once a month, 80% chose to initiate their account opening in a branch and only 8% started by opening their account online. And when customers did open their account online, they were far less satisfied with the account opening experience -- nearly 20 percentage points less -- than were those who opened their account in a branch.
All banks want to grow, and the vast majority of growth in the industry still comes through the branch. There are certainly opportunities for banks to encourage the migration of more routine transactions to remote or digital channels. At least for now, though, digital channels don't offer customers the kind of experience they desire for more complex, important interactions like opening an account. And for some customers, perhaps they never will.