Digital Tools to Change Banking Business Model, Marketing
Digital technology isn’t just impacting the advertising world. The banking industry is expected to undergo a significant shift as operators roll out more digital services and shutter the traditional branch and teller business model. These changes will drive competition, mergers and acquisition, and bring about the need for significant advertising expenditures according to a new Accenture Research survey: Banking in the Digital Era.
In the next 5 years, 2 large changes will take place in the banking sector:
- More banks will operate as online only entities and may capture up to 15% of industry revenue
- More banks will join retail partners, such as grocery stores, and these co-locations may account for 20% of industry revenue
Online sales of products that used to take place in traditional bank settings have doubled in the past several years. These services include home mortgages, auto loans, and equity lines of credit. Wayne Busch, managing director of Accenture’s North America banking practice notes that while the “Internet has long underperformed as a sales-channel for banking products,” the industry is changing. Consumers tend to stay loyal to their primary banks, with only 9% switching service providers in any given year. However, consumers do shop other banks for various services. At least 34% of traditional bank product sales were made to consumers from the non-primary bank recently.
The other big story in the sector is the rapid adoption of mobile banking services. Nearly 1/3 consumers engage in mobile banking on a monthly basis. Despite all of this convenience and technology, about 38% of consumers still want banks to invest in their branches. That’s below the 43% who want to see the online services improved. In addition, 21% want to see ATM improvement while 20% are eager for new mobile app developments.
Accenture analysts believe the industry will transition to more light branches and kiosks and fewer full-service hubs and flagship branches. To maintain loyalty, they will need both traditional and online ad campaigns to remind customers to use new services.
To learn more about Potential Bank Switchers, check out the AudienceSCAN report available on the Research Store at ad-ology.com.