For the first time, more people want to bank online than visit a bank branch in person, according to a new study by American Bankers Association, a trade group in Washington, D.C.
ABA’s annual survey of consumer sentiment found that one-fourth of bank customers now bank online and 21% visits branches. Branch banking has steadily lost ground to other banking methods. In 2007, 37% of people predominantly used branches, which maintained majority preference until this year. Online banking has hovered between 22% and 25% for the past two years.
This is both a challenge and an opportunity, says Doug Johnson, vice president of risk management policy at the ABA. “The challenge is that banks will see their customers on a less-frequent basis,” he says. “So it’s incumbent to buttress the customer relationship when they do see them.” But as more customers drift online, “banks can track how individual clients traverse the site, what products they look at, and they can use that information to talk to clients about their express interests.”
(For 17%, the predominant interaction is through ATMs; 9% use the mail; 4% bank by telephone; and 1% uses cell phones and PDAs. A nebulous “unknown” now counts for 23%, up from 5% in 2007. ABA spokesperson Carol Kaplan says this category encompasses the “don’t use” and “don’t knows,” but that the group suspects many people who use more than one channel equally used this option.)
Nicole Sturgill, research director, delivery channels, at Tower Group in Needham, Mass., predicts that the Internet will be banks’ primary customer touch point within the next decade. “Banks will need to face the fact that online distribution drives all other channels,” she says. “Everything needs to be accessible online, and that includes financial advice.”
However, Sturgill also predicts that while consumers will want more and more access to their financial information online, eventually it will get a little overwhelming and, ironically enough, they may start turning to financial advisors to sort it all out for them.
Until then, though, banks have to get smarter about cross-sell. The online dynamic—people accessing information not just from one financial institution, but many—means that banks will have to find ways to incentivize existing clients as well as new ones. “And every time they get face time, banks have to use it to the nth degree, much more so than now,” she says.
Kate Monahan, an analyst at Aite Group in Boston, agrees that while online banking will only grow in popularity, for important financial conversations people will always prefer humans to machines. “People will use the information to gather information or compare rates,” she says. “But for anyone who’s investing or planning for retirement, the branch is still the place they’ll use to talk about their goals and the choices they’ll need to make.”
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