“Social distancing” and “self-isolating” may have only entered into daily usage less than three years ago, but the transition to conducting our financial and economic activities without ever leaving our homes began well before the COVID-19 pandemic. In 2010, only about $165 billion worth of retail purchases in the U.S. were made over the internet. By 2020, that number had risen to more than $860 billion. Amazon alone saw its yearly sales increase over ten times in the same period. More and more customers have grown accustomed to being able to run their errands on their schedule and prefer access to digital account opening in retail branches.

Mobile banking apps have also made it possible for consumers to conduct most of their banking activities via their phones. And if there’s anything they can’t do simply by opening their bank’s app, over 80% of them wish that they could. Technology has made people more independent, and customers would prefer to solve their problems on their own without the help of a customer service representative, like access to digital account opening options in retail branches. Unfortunately, many banks are failing to keep up with the demand for customer self-sufficiency, and those who haven’t improved their digital solutions are starting to see themselves fall behind those who have.

Retail Banking

Retail banking is another term for consumer banking or personal banking. This is a separate service from corporate banking, although many institutions do handle both. Retail banking allows individual customers to manage their money, access credit securely, and make deposits. At a retail bank, citizens can conduct traditional banking activities such as opening checking and savings accounts, applying for mortgages, personal loans, and credit cards, and receiving deposit receipts.

Retail banks may be local community organizations, or they may be branches of larger national banks. In either case, retail banking aims to be a secure, one-stop location for individuals to take care of all their personal financial needs. While they once were the dominant institution in this market, they are starting to face stiff competition from fintech companies, many of which offer the same services but are completely digital. In order to retain their current customers, and maintain hope for attracting new ones, it is vital for traditional retail banks of all sizes to make the transition to offering well-rounded mobile and online services.

The Demand for Self-Service

Remember the statistic that 80% of customers would prefer more self-service options when it comes to their banking? 95% of banks said that they noticed a marked increase in customer demand for self-service technology but when surveyed, executives at banks across the country thought that number was closer to 60%. This demonstrates the disconnect between the need of self-service options, and awareness of this need in financial institutions. On average, the demand for these services increased by 37% between 2020 and 2021.

While it is clear that more than half of the population wants to be able to manage their finances without having to interact with a bank employee, a 20% gap between perceived demand and actual demand indicates that banks do not fully understand how highly they should be prioritizing the addition of more self-service options in their service offerings. Banking may be an essential service, but it is still a consumer market. When one vendor fails to meet market demands, customers look for other options that will fulfill their needs. Exposure to this type of potential loss of customers doesn’t just stunt a financial institution’s growth but can endanger the sustainability of the entire company.

Which Banks Are Growing, Which Are Falling Behind?

Almost 32% of the population—especially Gen Z “digital natives” who have come of age in recent years—prefer to avoid brick-and-mortar branches and conduct all their banking digitally. Between 25%-30% of customers between the ages of 21 and 41 have their primary checking account at a digital bank, and even 22% of consumers aged 42-56 have made the switch to fully digital banking solutions. The numbers are clear, financial institutions that provide digital services will continue to gain customers, while those who are resistant to fully digital solutions will continue to lose customers.

What does self-serve mean vs. traditional banking?
Self-serve vs. traditional banking is the difference between a customer’s ability to be fully self-sufficient in a retail branch or having to wait for a customer service representative in order to conduct their banking tasks. With in-branch self-service options, customers should be able to conduct all their banking like opening checking and savings accounts, applying for mortgages, personal loans, and credit cards, and receiving deposit receipts without needing to speak to anyone.

Traditional banking requires speaking to a representative and is subject to lengthy paper-based processes, or busy lineups. Offering in-branch self-serve options can help customers that choose to conduct their business in-branch have the option of skipping lengthy line-ups and being more self-sufficient with their banking, but continuing to have the option for representative support if needed.

 

KEY TAKEAWAYS:

The Ignite Open Solution

One way to jumpstart your institution’s transition to digital services is to provide an easy, efficient way for your customers to open a new account via digital means without ever having to contact a customer representative for help.

With IgniteOpen’s banker-designed digital account opening solution, you can say goodbye to time-consuming costly paper-based processes, and provide your customers with a quick, secure account opening experience. To learn more about IgniteOpen and start revolutionizing your financial institution today, schedule a demo with one of our representatives.

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