By the numbers, digital banking is — and is not — extremely popular with consumers of all stripes. According to the latest edition of the PYMNTS Digital Banking Tracker, when it comes to some tasks, consumers are clearly comfortable with leaving the physical world behind and making the digital conversion.
Nearly 60 percent of American smartphone users have at least one financial services app installed, which represents an all-time high. Of those with mobile banking apps installed, 70 percent check those apps once per week and 16 percent check them once per day.
The penetration is there, as is consumer interest — but it is far from equally distributed across mobile banking uses. Some things customers are doing from their phones with enthusiasm.
Other things — not so much.
As it turns out, sixty-three percent of Americans reportedly prefer opening new checking accounts in person as opposed to using a mobile app or online interface, and 50 percent consider online banking “less legitimate” than doing business at a branch.
And that mindset — according to what Michelle Spellerberg, Alliant Vice President of Marketing & Digital Channels, told PYMNTS — is the mindset mistake that is keeping consumers bound to the brand, despite the fact that the concept is, in Alliant’s opinion, “on its way out.”
“I think if you look at the entire movement of the ecosystem — and the way that the entire ecosystem is moving away from cash — I think the death of banking by branch is a when, not an if. Digital payments are making phones into wallets, it’s easier to use a phone that cash to repay a debt because of P2P payments — consumers are even changing the way they are shopping in retail stores.”
The direction of the market, she said, is toward digital — and while she noted that the transformation isn’t happening overnight, and is unlikely to start unfolding that way, it seems clear to Alliant that the consumer need to handle financial transactions face-to-face will continue to drop away.
“If you look at the numbers, not just on how often people are using digital banking apps, and just look at how quickly online banking has spread in the age of mobile — that looks like the most logical conclusion,” she noted, saying that there is still a lot of inertia in the marketplace to overcome.
It’s All About Changing Habits
If you think about much of how consumers bank, she noted, what one tends to see is a lot of habits deeply ingrained.
“This is a learned experience from when we were all kids. One of the Saturday chores is loading into the car with mom or dad and going to do the week’s banking.”
That, she noted, for many people just becomes the definition of the banking experience — it doesn’t have to be an experience anyone even loves. Most things described as “chores” aren’t beloved experiences, according to Spellerberg — but being lovable isn’t necessary for something to become a habitual behavior for consumers. It just needs to be something they’ve gotten used to doing as a matter of course “like schlepping to a bank to deposit checks.”
Overcoming that, she notes, is harder than just waving one’s hands in the air and telling consumers about a much better experience they could be having.
“Because that does nothing to reach consumers who go into something saying they won’t even consider a new method upfront. You can’t just tell people — in our experience, when you want people to uproot their banking experience to the web, you have to show them this is in their interest.”
And that, she noted, doesn’t have to be a complicated recruitment process. A favored tactic Alliant uses, according to Spellerberg, is good old-fashioned direct mail paired with an even more old-fashioned $5 check.
“We also send them step-by-step instructions on how to use a camera to deposit that into an Alliant account because just walking people through the process once is actually usually enough for them to get the concept.”
What once looked insurmountable to a customer now looks a lot easier, she noted, and suddenly you have a customer who is willing to change a habit in favor of maybe building out a better one.
Really Knowing Your Customer
Alliant, Spellerberg said, is older and bigger than most people realize — as it first made its appearance in the market as United Airlines Credit Union about 80 years ago. Today, she noted, they have over 380,000 customers spread all across the nation — without a branch location to call their own.
And when they first made the jump to being a web-based credit union nearly a decade ago, they actually made a wrong assumption about who their customer base would be.
“We assumed when we went to digital millennials would be our key target market,” she noted, but said that their experience has actually been a much more all-over-the-map demographic set. Alliant, she noted, serves Boomers, Millennials, Xers — they tend to show up in Alliant’s customer pool in about the proportions that demographic data would imply they would, with only a very slight tendency to skew younger.
What they tend to have in common more often than age — when Alliant polls their customer base on what innovations to add — seems to be the attitude.
“These are people who tend be be financially savvy and who are looking for low fees in specific. They also tend to be comfortable with technology to the point that they will often prefer those interactions to face to face interaction.”
Which isn’t to say that their consumers don’t want a human being to interact with. Spellerman told PYMNTS that in most cases, customers prefer a human being to interact with on complex transactions, even if they prefer automation for simple transactions like check deposit.
“But what we see is that can usually be over the phone — most people find they don’t really need face-to-face and aren’t will to pay in inconvenience to get it.”
Because, she noted, what the digital banking revolution needs to concentrate on, above all else, is convenience for the customer — and helping them realize that that is what they want for themselves as well.
“I think it is easy to get into the habit of being inconvenienced to the point that it feels like doing extra work to deal with money actually feels important to consumers. But we think, with the right guidance, it is actually easier to get into a habit of things just being easy.”