Tracking retail banking trends: prepare today or fail tomorrow

What does the future hold for retail banking?  Let’s tap four sources for insight – media, financial results, an industry analyst perspective and bank CEO comments.

First, let’s look at some recent article titles from publications such as Bank Technology News, American Banker, and BAI Banking Strategies:  The Shrinking Bank Branch, Poll Results: Are Bank Branches Going the Way of the Buggy Whip? and Moven to All-Digital Banking. They all tell us that retail banking is moving away from the branches towards digital channels.  By the way, American Banker readers did answer “no” to the poll question about the buggy whip(by 71 percent). And ”Moven” isn’t a typo in the last article title; it’s a reference to the “all-digital” start-up Movenbank created by Brett King (author of BANK 2.0 and his recent e-book Branch Today, Gone Tomorrow).

The trend toward digital channels continues as we look at two data points from 2012 first quarter results.  Wells Fargo reported that they now have 21 million active online customers while JPMorganChase reported that their active mobile customers increased 42 percent over the same period one year ago to over 8.5 million.

From the analyst perspective, TowerGroup’s senior research director Rod Nelsesteun recently wrote about the difficulty that banks now have defining the customer and the markets they wish to target. The challenge is clear:  “Customers now act on their disapproval of an institution, demand change when they think it’s necessary, and seek out FSIs with services they want, delivered in the channels they prefer.”

What do bank executives think about the future?  I wrote in a recent post that Richard K. Davis, CEO of U.S. Bancorp told an audience that banks must “pivot to win” (be flexible and innovate). Francisco González, Chairman of BBVA, recently wrote in The Banker that “only banks capable of cultural and technological transformation will be able to complete” with new providers of financial services.  He described a new banking model based on “much more modern technological platforms, capable of absorbing and processing all the relevant information about every customer and channeling it in an equally fast, flexible way through all points of contact with them.”

How can banks transform to understand and predict every need, influence every interaction, deliver high levels of customer experience, and most importantly, cement the bonds of trust and loyalty with customers that only exist in digital channels?  I believe the answer must be founded on analytical innovation, which includes visualization of the correlations in Big Data on customers that can be quickly identified as the key to perfect customer insight. Banks analyzing Big Data on customers with previously unavailable speed and precision can improve their actions while customers are “in-session” in near real-time. If you would like to explore how your institution can win with customers using analytical innovation, check out Banking on Analytics or comment below.

tags: digital banking, retail banking

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