In keeping with their present lifestyles, mobile-empowered consumers are latching on to the next big thing in financial services: ‘digital banking’, or what is often referred to as ‘branchless banking’. According to the latest survey of U.K. current account customers conducted by Accenture, consumers are more likely to shift away from conventional bankers and consider non-traditional providers such as Google (News - Alert) or Amazon.
“This year’s survey underscores the growing complexity in how consumers want to interact with banks in the digital age,” said Peter Kirk, a managing director in Accenture’s (News - Alert) Financial Services group.
So, does this pose a threat to conventional banking?
Based on interviews with more than 3,600 U.K. current account holders, the survey notes that branchless banking has gained greater acceptance over the years, and more than 25 percent of U.K. consumers are keen on using a pure digital bank through their mobile devices.
Even more interesting is the fact that the customers aged 25 to 34 are most keen on the idea of a pure digital, branchless bank, while those aged 18 to 24 – are the least receptive, with only 22 percent saying they would consider it.
According to Kirk, “The youngest, most tech-savvy-customers still value face-to-face contact as they begin their life’s financial journey, whereas older customers who are further along in their work life are more open to a digital-only relationship.”
Trust levels in banks have apparently increased significantly in 2014, when compared to 2012. Also, more customers are willing to recommend their banks than before, and a greater number believe that ‘banks are fair.’
“Given all the investment and efforts made by banks, it is encouraging for them that customer perception is improving after falling sharply during the financial crisis,” said Kirk.
Although customer sentiments towards banks are improving, new competitive threats are emerging, and now banks have a lot to deal with as they look to balance digital channels with costly branch networks, and deliver relevant services. Customers expect speedy service and convenience, and value simplicity; banks must deliver.
Kirk notes that banks need to differentiate themselves in order to grow their business and increase market share, re-engage with customers differently, improve services through analytics and customer loyalty.
Hence, it doesn’t seem as if it’s the end of the road for banks and their branches, but they need to pull up their socks and reach out in more ways than one.