The past few years have seen retail banks start to successfully integrate digital into a continuous omni-channel experience for customers across marketing, selling, and delivery of their products. With the internet continuing to make inroads into almost every aspect of our daily lives, the need for this integration—and the opportunity it presents—is obvious.
Heavy use of digital for promotional and marketing purposes—through social media, internet search, digital ads, websites and so on—is now commonplace. The service element—i.e., how customers consume financial products—has also been transformed by the rise and popularity of online banking. For instance, most banks now offer customers mobile apps through which they can quickly and easily check balances, view transactions, and make payments, all through an attractive and user-friendly interface.
Of course, the best marketing in the world is worthless if it doesn’t convert into customers. And it doesn’t matter how great your product or service is if no one is buying it. Sales is the crucial link that bridges this divide, and the industry is making progress at integrating digital here, too. The top 10 banks across the U.S., U.K., and Australia offer digital applications for 6 in 10 personal banking products.
While this represents a substantial increase, it also shows there is still progress to be made. In particular, the retail banking sector is behind the pace when it comes to the sharp rise in smartphone use and the potential for mobile as a sales channel. Despite the availability of online digital applications, only about 20 percent of personal banking products in the U.S. can be applied for using a mobile device. With nearly 70 percent of U.S. adults now owning a smartphone, there is every reason to forge ahead in this area.
The Abandonment Problem
Simply having a digital or mobile on-boarding process, while a step forward, is only the first step. Many banks still run into "the abandonment problem"—customers who start the process but drop out before the end. Imagine a consumer viewing a TV ad for a new credit card. They use their smartphone to visit the bank's website to learn more; perhaps they're even ready to apply. But if the mobile application experience is poor (perhaps the on-boarding process was designed for a PC rather than a mobile device), too much typing is required, or the application isn't touch-friendly, the customer is likely to abandon.
This can be a huge problem—it isn't uncommon to see abandonment rates of 85 to 90 percent for new product applications: a major and unnecessary loss. To put it in perspective, imagine a real-world shop where 9 out of 10 customers left without buying anything because of a frustrating experience at the register. As well as being potentially brand damaging, it represents a waste of the marketing budget. Assuming it takes $100 of your marketing budget to get each customer to the point of applying (a conservative estimate), that quickly adds up to millions down the drain annually. This is not to mention lost revenue from the product itself.
The drivers of abandonment are numerous. However there are some big problems and pitfalls that crop up time and time again. For instance, a good user experience typically starts with the easiest questions and leaves the more difficult questions until the end of the process. Yet a lot of digital on-boarding processes tend to operate in the reverse. If a question requires effort—if, for example, it forces the customer to go and get their wallet (which may be in another room etc.)—then it is much more likely to cause abandonment at the start of the process rather than the end, by which time the customer will feel far more invested (“I’ve come this far”).