The Battle: Digital vs Traditional Banking

Let’s face it, we are fully immersed in a digital world and banks are finding a decline in traditional banking. Statistics show a 41% decline in teller transactions since 1992, further revealing the need to provide an engaging mobile banking experience.Research from banking professionals has shown that loyal customers are now few and far between. Traditional banking used to lend itself to loyal customers who would open a savings or checking account and then continue to use the same bank for all future banking needs such as more accounts, business accounts, mortgages, etc. Statistics from Digital Onboarding, a financial technology company that works with banks and credit unions, show that 25-40% of people who open a new checking account close them within the first year. However, banks are still working hard to retain those close relationships with loyal customers.

Banks of all sizes struggle to find the balance between personal connection and optimal mobile offerings. Mobile banking lends banks an opportunity to provide a great experience whenever and wherever customers want. Of the 75% of Americans who own smartphones, 60% use mobile banking apps. While young professionals among many other bank customers prefer mobile offerings, many customers still want a personal connection with their bank. Financial institutions are finding that the experience a customer has with a mobile banking platform plays a huge role in customer retention. Many Arkansas-based banks, like Arvest Bank, are using test labs to gather data to improve their mobile banking services and offerings.

Mobile banking services should be user-friendly, convenient, and quick. They should also have offerings that match what’s available in today’s marketplace. However, research has found that offering the most technologically capable services are not always what drives customer retention, it’s the emotional connection to the user.

The customer is happiest when they feel in control. Providing what they need, teaching them how to use the services, and giving them time to decide for themselves is important for maintaining customers. At Simmons Bank, they chose to approach the introduction of a new app with an invitation to join, rather than forcing them to change abruptly, giving them time to learn the new technology at their own pace rather than shocking or inconveniencing users. 

While mobile banking will continue to grow, there is still a place for traditional banking in today’s market, especially in rural areas. Providing interaction with customers at bank branches is needed from time to time. Even those who prefer mobile banking find comfort in knowing a real person is available to them whenever it’s needed.

Sources:

1. https://www.arkansasonline.com/news/2019/sep/29/banks-striving-for-connection-in-digita/