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As the US retail banking landscape evolves from physical to digital, traditional providers need a radically new approach to distribution—one that combines a simpler, yet more comprehensive branch offering with the continuous innovation of seamless digital services.
For traditional US retail banks, today’s markets are fraught with challenges: new digital competitors and digitally empowered customers prominent among them. Yet most still pursue business as usual, striving to be all things to all customers. Despite their best efforts to focus on the customer, many still don’t offer what their customers actually want. These banks also tend to manage their extensive channel networks—including digital—separately, and not as a holistic function impacting all aspects of their retail operations.
Banks will need to rise to the digital challenge—but it won’t be easy. As Accenture’s 2013 survey of US retail banking customers reveals, banks have a tenuous relationship with their customers. Learn more about the key findings.
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This is Accenture’s second consumer banking survey in as many years and involved online interviews with more than 2,000 US retail banking customers of the 15 most leading retail banks doing business in the United States today, including the 10 largest US-based retail banks, three of the largest foreign banks with a branch network in the United States, and the two largest US virtual banks.
Accenture research highlights five key findings that underscore the need for a more radical approach:
Retail banks are managing a tenuous relationship with their customers. Customers still value what they get from branches—but they also want more online. In fact, customers acquired more than one third of traditional retail banking products from institutions other than their primary bank.
The branch-banking conundrum. Nearly four out of five customers say they expect to be visiting their local branch just as frequently—or even more frequently—five years from now, in large part because 66 percent of them still prefer to talk to a person rather than purchase a banking product online.
The cross-selling challenge persists for full-service providers. US banks have plenty of information about their customers, but our research shows, that many don’t necessarily know how to make sense of it. As a result, customers are shopping around.
The digital era has arrived. Digital banking is becoming essential. Consumers view online banking as the single most important area for banks to invest in and develop. Mobile banking activity has increased nearly 50 percent since 2012, with nearly one-third of customers active at least once a month.
The potential of social media and video conferencing remains untapped. Some customers are seeing tangible benefits from blending social networks with financial activities. Well over a third, for instance, say they would like to be able to locate branches through social media.
A new approach to distribution is required for traditional banks, and that way forward is to:
Enable the digital model. The key reasons customers switch banks is in pursuit of more personalized service and faster problem resolution. Digital is critical to the more agile and innovative operating model that traditional providers now require.
Revamp the branch. More branches close to where they live or work was a key reason to switch providers for 27 percent of Accenture survey respondents. About half said they would be inconvenienced by the closure of nearby branches to such an extent that it would induce them to switch. Some of the largest US retail banks are already experimenting with more open and flexible branch formats that give customers multiple options.
October 29, 2013
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