A closer look at digital banking customers and digital latecomers


The following is an excerpt from our article Create more digitally-oriented customers, written to help financial institutions improve customer digital adoption.

The TrueDigital Quotient of a bank customer is the measure of their ability to carry out the desired action by digital means. Knowing this number for each customer is essential to be able to meet their needs.

But that’s only part of the picture when it comes to embracing digital. Your customers, even those with similar TrueDigital quotients, are not all the same. Their individual behaviors, especially their interaction with your digital offerings and tools, can be observed and used to sort them into digital groups or segments.

It is by knowing both the TrueDigital quotient of a client and their digital segment that financial institutions are able to improve on the service provided and meet with every customer exactly where they are to help enable digital adoption.

The 3 main digital segments

There is significant variation in the types of actions and transactions that customer groups complete through digital channels. Some customers only use online or mobile banking for basic actions, such as checking an account balance, making a mobile check deposit, or transferring money, but they generally prefer to interact with their bank. via human channels. Gallup calls these customers, as well as customers who never interact digitally, digital latecomers.

At the other end of the spectrum, digital front customers look to digital channels as their first choice for all of their basic banking and the majority of their complex banking operations, such as opening or closing an account, applying for a loan, or solving a problem or a problem. Digitally oriented customers typically only use human channels if they cannot complete their intended action in a digital channel.

The remaining customers in the environment spectrum tend to use digital for many of their basic and complex banking needs, but tend to turn to human channels as the complexity of their needs or actions increases.

  1. The digital latecomers: Customers who never interact digitally or only occasionally use digital for basic banking transactions and prefer human channels for most actions.
  2. Forward-thinking clients: Those who use digital channels for basic and complex actions and rarely use human channels.
  3. Intermediate customers: Those who use a mix of digital and human channels for their basic and complex actions.

Two-thirds of bank customers in the top quartile of digital adoption are ahead of digital – almost none are behind digital. However, banks in the bottom quartile of digital adoption have an average of 13% forward-thinking customers and 18% digital laggards. Across the industry, the typical bank or credit union has a significant opportunity to increase digital usage with seven out of ten customers.

Custom graphics. Among industry leaders, 80% of customers are digitally oriented. Among financial institutions in the first quartile, 66% are ahead of digital. Among mid-range institutions, 31% are numerically ahead and among financial institutions in the bottom quartile, 13% are numerically ahead.

Not all forward-thinking, intermediate or lagging customers are alike. Gallup is partnering with its customers to break down these three broad categories into more nuanced customer segments to help executives prioritize and prioritize their actions.

Banks need to know the percentage of their customers in each segment and focus on eliminating digital laggards and shifting customer behavior towards greater use of digital.

So how should banks go about creating more digital customers? First, let’s discuss the challenges that executives and banks face.

Common challenges that prevent human channels from optimizing digital adoption

Gallup’s work with bank clients uncovered six areas where banks are struggling to accelerate digital adoption through human channels: Culture, Change Leadership, Infrastructure, Analytics, Taking decision-making and career paths / skills.

1. Culture

  • Common challenges: the underutilization of employees to promote digital adoption; lack of alignment between leaders and business units
  • Knowledge: human channels (“touch”) are three times more effective than direct channels in raising digital awareness; four in 10 employees know what their company stands for and what sets the brand apart from its competitors

2. Change direction

  • Common challenges: significant variation in digital adoption between key markets / segments; expectations, dashboards and incentives don’t support digital adoption
  • Knowledge: the focus should be on how there is often a 20% to 30% difference in digitally active customers between markets

3. Infrastructures

  • Common challenges: to reliably create the adoption of digital and basic functionalities at scale; lack of a digital empowerment organization to connect digital to business lines and divisions
  • Knowledge: less than half of bank customers say that their bank made them aware of the digital tools they could use; only 39% said their bank instructed them on how to use the tools

4. Analytic

  • Common challenges: know which customers can and will adopt digital offerings; quantify the value of a customer engaged in digital (cost and lifetime value)
  • Knowledge: Leading banks in digital adoption have more than twice as many digital customers as average banks

5. Decision making

  • Common challenges: unclear decision-making authority; competing priorities and misalignment between digital and other business sectors
  • Knowledge: six in ten employees say they do not have the materials and equipment they need to do their jobs well (eg, decision-making power, access to knowledge or resources, expertise)

6. Course / Skill

  • Common challenges: focus on attempts but not on skills; inconsistent experience between channels
  • Knowledge: clients perform three out of four complex actions through human channels; only 17% of banking customers are extremely satisfied with all the channels they use

Based on our customer commitments in financial services, Gallup recommends that banks create their Digital culture and enabling infrastructure by implementing four pillars to accelerate digital adoption through human channels. Gallup helps banks operationalize each pillar and optimize collaboration within and between pillars to achieve real scale and impact:

  • governance
  • change leadership and execution
  • digital activation
  • analysis and impact

Learn more about the four pillars and how to tackle common challenges to drive digital adoption:

Authors)

Anson Vuong is a senior management consultant at Gallup.

Andrew Robertson is a management consultant at Gallup.

Jessica Schatz contributed to this article.


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