Mobile banking use increased significantly on a global scale in the past year, a recently released report from Bain & Company finds, and is now the dominant banking channel in most of the markets surveyed. The report further finds that there is a positive correlation between customers’ omnichannel interaction with their bank and the customers’ loyalty and engagement with that bank. According to the firm, banks should respond accordingly to this development, as loyalty produces growth and profitability.
Bain & Company recently released its fifth annual report on customer loyalty in retail banking, titled “Going DigicalSM: Customers Love the Smart Fusion of Digital and Physical Assets”. The report analysed the survey results of 83,000 bank customers across 22 countries, and asked about their use of digital channels and how they affected bank loyalty.
Mobile banking on the rise
The number of users engaging with their banks through mobile applications, on smartphones and tablets, is on the rise, with an average 19% increase since Bain’s 2013 report. Particularly the UK has seen a rapid increase of the use of mobile banking, with mobile interactions now outstripping online interaction and up markedly from 2013 when users used mobile for 16% of interactions and almost 44% were online. Within a year, the balance between online and mobile interactions has shifted to favour mobile, in Australia, US, France, UK, Italy, China, and Spain. In every country surveyed mobile banking increased between 2013 and 2014, while online banking decreased significantly in all but Japan and Mexico.
Not everyone is adapting to digital engagement, with proportions of bank users sticking to the more traditional channel of visiting a branch, which occurs particularly in Japan and Mexico. Interestingly Japan also has the largest proportion of users that only engage with their banks online and the smallest number using multi-channel engagement. Germany also shows a large group connecting primarily through the digital channel only. In deference, emerging markets such as China and Indonesia have a high proportion of multi-channel engagement.
“We’ve seen greater changes in customers’ banking behaviours in the past year than we have at any time during the five years that we've been publishing our research. This change is, of course, led by mobile, which is now the dominant banking channel in most of the 22 markets we surveyed,” comments Gerard du Toit, lead author of the research and a Bain partner.
Omni-Banking on loyalty
The Bain survey also looked at the relationship between types of customer, in terms of how they engage with their banks and the level of loyalty they have with their primary bank. The key insight is that multi-channel use is correlated with higher bank loyalty and engagement, that is, with higher bank product engagement.
According to the consulting firm, omnichannel engagement is important for banks to fully engage with their customers, as some users still prefer to do some business human to human, while other product purchases and interactions can be arranged digitally. Creating the conditions to engage with customers in a full theatre of potential is the best way to engage and keep customers loyal.
“Customer loyalty and sales effectiveness are tightly linked when it comes to banking,” concludes du Toit. “Banks that successfully deliver a seamless customer experience will be rewarded with customers who come back for more and tell their families and friends to do so, too. This in turn produces growth and profitability, which has been a struggle for many financial institutions since the economic crisis. Those that fail to fuse the digital and physical will fall further behind, unable to invest enough to ever catch up.”