Cisco Study: Digital Lifestyles Drive a Widening Gap Between Consumers Expectations and Bank Delivery Explosion in Customer Adoption of Technology Increasing Expectations of All Age Groups. 65 Percent Would Move Money for IoE-Enabled Banking. Evolving to Digital Bank Model Could Drive 5.6 Percent More Profitability for Banks BAI Retail Delivery Conference and Expo, Booth 4029
CHICAGO November 13, 2014 At the BAI Retail Delivery conference, Cisco today announced the U.S. findings from its global study of more than 7,000 consumers in 12 countries revealing a gap between digital consumer behavior and bank delivery. U.S. consumers are living a digital lifestyle but see their primary bank as currently lagging in the ability to deliver convenient, personalized service. This divide goes beyond Generation Y, with 65 percent of all U.S. respondents suggesting that they would move money to a different financial institution for personalized Internet of Everything (IoE)-enabled services, in areas such as mobile payments, branch recognition, smartwatches, real-time videoconferencing, and automated financial advice derived from deep analytics.
Of the 603 U.S. consumers surveyed: 41 percent of Generation X and 36 percent of Boomers surveyed expressed that their bank does not understand their needs; 43 percent of all surveyed believe their bank does not know them and consequently cannot deliver personalized service; and nearly a third of customers will look into alternative banking relationships because they do not believe their bank is helping them reach their biggest financial goals.
Upside for Banks: Focus on Digital Behaviors, Not Demographics
Financial services institutions have an enormous opportunity for growth when they become just as digitized as their customers, whether in the branch or far beyond. The research findings indicate that it isnt only Millennials and Generation Y that respond to technology offerings from financial institutions. Consumers from all age groups affirmed their desire for technology that opens the opportunity for personalized anytime, anywhere service in their banking relationships.
The study identifies important new customer segments in terms of digital behavior and not just age. Moving forward, it will be important for banks to recognize these segments and their receptivity to interactive solutions. The study found, for example, that within Gen Y there are distinct segments looking for different kinds of engagement with their banks. And among older consumers, there are many who are more open to digital solutions than previously thought.
Economic analysis from Cisco Consulting Services projects that changing the customer-relationship model in the branch and other digital channels could result in a bottom-line increase of 5.6 percent for a typical financial services firm. For a typical financial institution in the United States with $10B in revenue, this represents a $392M annual profit increase opportunity.
The study, which was also supported by interviews with industry thought leaders, shows there is a significant opportunity for retail financial services institutions to evolve to a digital business model. This will reduce attrition and increase customer wallet-share by utilizing the Internet of Everything to:
Deliver more personalized and convenient services, with 53 percent of respondents looking for remote advice delivery outside of the branch
Dynamically apply analytics to better understand consumer behavior, with 73 percent of respondents interested in one or more analytics-based banking tools and apps
Provide integration of physical and virtual channels to deliver services on-demand, with 24 percent of respondents stating they would invest more of their assets and 26 percent stating they would buy additional products
The study also shows that in this IoE era of high connectivity, security is a top of mind prerequisite for the digital consumers bank.
Based on analysis for a financial institution with $10B in revenue, implementing the following technologies could increase profits in the millions of dollars:
Video Mortgage $134M
Video Advisor $131M
Branch Recognition/Personalization Services $112M
Automated Advisor $65M
Mobile Payments $26M
The Digital Consumers Appetite for IoE-Enabled Services
Videoconferencing
Regardless of the mode of delivery, customers want the ability to chat with a trusted adviser, but the experience and relationship must feel like an in-person interaction
54 percent of U.S. respondents seek remote-advice delivery outside the branch
Top preferences for video advice, in order, include: financial planning, problem resolution, stock and funding picks, selecting bank products and insurance policy advice
More than a quarter of those interested would move their money for video advice
Mobile Payments
72 percent of respondents would use a mobile payment system if it had the capabilities they most want
15 percent would definitely start an account to get it
The top factors that would increase a consumers willingness to use a mobile payment system include:
o More secure
o Easy to use
o Accepted at most merchants
Smartwatch Applications
Nearly half of all respondents (47 percent), regardless of age, are interested in banking with a smartwatch application to:
o Check account balances (28 percent)
o Receive alerts to avoid overdraft fees, for example (24 percent)
o Transfer funds between accounts (23 percent)
o Pay for an item in a store or physical location (22 percent)
o Receive and redeem special offers or promotions (22 percent)
Augmented Reality
76 percent of consumers are interested in augmented reality experiences that, when viewed through a smartphone, superimpose discount offers over local retailers
Other potential avenues for augmented reality development by financial institutions includ
