Digital banking more important than branch proximity for customers

The 2017 Omni-Channel Shopper Study found several major shifts in consumer behaviour that could impact bank distribution and sales strategies in the future. US consumers now prefer efficient online banking services over branch proximity as the demand for digital account opening is increasing.

The report found that segments that placed the highest importance on branches for their banking services has shrunk in 2016 and fewer clients are depending on branches for ongoing transactions. When looking at the correlation between a dense branch network and the tendency to acquire a higher share of deposits, Novantas found that younger consumers are the least influenced by these factors.

The findings mark a change in what consumers expect from a bank. Personalized services are becoming an important decision making factor for consumers who want to open an account. To win customers, bank will have to think at a micro-level and offer targeted and digitalized services.

When it comes to convenience, something that in the banking industry always meant branch proximity, the study shows that digitalization is the new definition for convenience. According to the report, for consumers the drivers of ‘perceived convenience’ start with an organization’s digital capabilities. In fact, the importance of branch-centric factors have dropped from 2014 to 2017.

Consumers are also becoming more comfortable to open an account online, without having to visit a physical branch. Over a third of consumers prefer to open their account digitally, with the number being higher (46%) if the consumer shopped using digital channels exclusively.

The Novantas shopping survey found that 79% of consumers are doing at least some of their shopping for new checking accounts digitally, with 54% using only digital channels. These digital-only shoppers are both older and wealthier and the size of the digital-only shopper category increasing.

Although online banking services become increasingly important, banks continue to lag when it comes to digitalization and many consumers are forced to use channels they do not like. The report shows that fewer than 9% of consumers are actually successful in applying for, and opening, their accounts entirely online.