We just came off a year that changed just about everything. So far, it looks like 2021 is going to offer about the same.
I love how quickly we all accepted the term “new normal”. A topic that hits home for all of us is how drastically the pandemic has changed the way customers, or households (HHs) bank.
Let’s review some together:
- Lobbies closing placing greater reliance on digital channels
- Concerns for the safety and security of personal information grew with more digital reliance
- Contact Centers across the country grew in importance for delivering service
- Relationship and engagement with the bank were highlighted and depended on
- Customers sought advice from their bank, identifying these topics as most important: Investments (asset protection); Retirement (planning and asset protection); Improving their financial situation (financial health); and Keeping track of finances (budgeting)
- Customers who became less satisfied with their financial situation became less satisfied with their bank
- Banks are now expected to be committed and play a role in Environmental, Social, and Governance (ESG) issues becoming more socially aware
- Retail bank customers, especially the younger HHs, have low financial literacy at a time they need it most
This just part of the daunting list of changes we’ve experienced in one twelve-month period. Several of these are compounded by a low-rate environment—squeezing margins and leading to more economic uncertainty. Honestly, it has felt overwhelming at times.
But wait, maybe there’s another way to think about this “new normal”. The ending of the saying “The more things change” is “The more they stay the same”. Let’s look at the bullet points above one by one and reframe them together:
- Yes, lobbies closed but the influence of digital has been growing steadily for the last 4 years (17% of retail HHs identified as “Digital Only” in 2017 and has grown steadily to 30% in 2020)
- Safety and security when it comes to banking in general, and digital banking specifically, have always been a customer concern. Efforts to address these concerns aren’t new.
- No doubt Contact Centers have been challenged with spiking call volumes the last 12 months, but they were always intended to be an important alternative to branches on weekends or after hours. Volumes have grown but their role has stayed the same.
- Relationship and engagement: For the past four years, the most powerful influence on a Millennial’s selection of a new bank has been a family referral. That hasn’t changed with COVID. 90% of Millennials have been telling us they were “somewhat (47%)” or “very (43%)” interested in receiving advice from their bank for years, long before COVID. 58% of Millennials acted on the advice – before COVID – when they found it to be meaningful to them (pertinent to their life stage)
- Customers seeking advice isn’t new. As a matter of fact, those four topics have consistently been identified in that order for the last four years. (There’s a fifth – saving for a large purchase like a home or car that has fallen a bit lately) The average percentage of retail customers receiving advice from their bank – all banks, not just mid-size – across the country is roughly 30% in that same time frame (last four years). This is an opportunity for everyone and has been for a long time. The bank(s) that figure this out first will reap the growth benefits. The percent of customers “very interested” in receiving advice from their bank has grown from 27% in 2017 to 37% in 2020. Satisfaction scores with their bank from customers that receive advice have also consistently grown from an average of 804 in 2017 to 833 in 2020
- Being “socially aware” isn’t new all for mid-size banks. Mid-size banks are viewed as more trustworthy and have better reputations than their larger peers and have for years. Being committed to the communities that we serve has driven growth and built relationships that will endure
- Customers becoming less satisfied with their bank as they worry about, or see their financial situation worsen, isn’t new. There are a couple of things to consider as a mid-size bank. Mid-size banks have consistently scored higher in Overall Satisfaction than their larger peers (for years, not just recently). Mid-size banks outperform their larger peers across customer segments – especially older HHs – who can be referral machines for them. Mid-size banks are viewed as more friendly and customer-driven than their larger peers
Lack of “financial literacy” isn’t new. I’ve been in banking-related jobs for 30 years, and while I can “wonk” on about twisted, inverted yield curves and accrued interest, most can’t and have very little interest. Financial health has always been important to the relationship we have with our customers.
Helping them weather the storms has always been our job. This is a “teaching moment” if there ever was one.
My point is not to make light of 2020 or diminish the challenges it threw at us. It is to point out that these challenges don’t have to be so daunting. Rather, it’s to say that many of those very challenges can be met and conquered by doing what we know. The very things we have been doing for years, long before 2020 are the path to follow.
Customers need our help today, and it seems like for a while to come, getting through considerable uncertainty. (Yes – banks aren’t the only ones dealing with a lot of that) There isn’t anybody better prepared and with a stronger history to do exactly that than the mid-size bank.
So, I submit, we aren’t experiencing a totally “new normal” for mid-size banks. I prefer to consider it a “routine focus” that will lead the way forward.
The more things change, the more they stay the same.