Facing the Realities of the Digital Age
J.D. Power’s 11th U.S. Retail Banking Satisfaction Study published in 2016 contained an important, and concerning, first: the largest financial institutions in the United States had a higher customer satisfaction rating than regional and community banks. For these too-big-to-fail institutions, analysts credit their digital transformation investments as the key driver for the positive change in consumer sentiment.
Results from a Harris study conducted in early 2017 also suggest that many banks and credit unions were struggling to meet consumer expectations when it came to digital banking. Nearly 60 percent of respondents who had used online or mobile banking services in the last 12 months were dissatisfied with the digital services offered by their institutions. Over 30 percent were willing to change banks or credit unions to get a better digital experience.
The question is this - how many dissatisfied consumers have already changed financial institutions, and where did they go? This quote from a Wall Street Journal article published in March 2018 brings it full circle: “The three largest U.S. banks by assets have added more than $2.4 trillion in domestic over the past 10 years, a 180% increase, according to a Wall Street Journal analysis of regulatory data. That amount exceeds what the top eight banks had in such deposits combined in 2007.
If you are a regional or community-sized institution, this is not an interesting piece of data, it is a crisis that should be at the top of the list of priorities in 2018.
The three largest U.S. banks by assets have added more than $2.4 trillion in deposits over the past 10 years, a 180% increase exceeding what the top eight banks had in such deposits combined in 2007
Where’s the Progress?
Why is it that, more than a decade after the smartphone majorly disrupted the financial services industry, the majority of financial institutions are still unable to provide what consumers want when it comes to digital? The specifics may vary, but the general reason is that, too often, financial institutions think of digital as limited to activities that involve devices, such as laptops, smartphones, or tablets. This mindset is the source of many of the more reactive steps taken by banks and credit unions in an attempt to catch up.
There is a small number of early movers in financial services that are building strategies and budgets based on another view - that digital is not a single type of interaction confined to a particular device, but rather an overall experience. To approach digital in this fashion requires that a financial institution evaluates all its customer-facing services with the understanding that digital is now how we live, rather than a single part of our lives. In other words, getting digital “right” has to be more than just upgrading a legacy online banking system or an aging mobile offering.
To move from “catch up” to “catch me”, banks and credit unions must apply the “digital is how we live” mindset to developing a digital transformation plan for their organization. This will most definitely include evaluating the current set of digital services and the solutions used to deliver them, but the scope of the project must go further; stretching into how future innovations can be introduced quickly and often. In addition, considering how all aspects of an organization line up to support the transformation may lead to changes in the organizational structure, budgeting process, and even compensation structures.
What We Offer
SRM provides a wide range of consulting service designed to facilitate the digital transformation at community and regional financial institutions. These services include:
- Analysis of User Expectations Research – SRM can provide services designed to assess current consumer satisfaction levels, end-user demographic segmentations, and data from recent surveys of digital consumers across the United States. If an institution lacks this information, SRM can provide guidance and advice on how to gather the information quickly and efficiently.
- Evaluation of Digital Anchors – SRM develops a gap analysis by assessing the institution’s current digital strategy, platforms, and services vis-à-vis consumer, generational, and general user satisfaction benchmarks. Gaps identified relative to the stakeholders and/or prospective stakeholders would be prioritized and used as a baseline for inclusion in an overall digital transformation strategy and implementation plan.
- Evaluation of Remote Delivery Channels – An additional gap analysis is conducted by SRM involving the evaluation of all remote delivery channels an institution utilizes to provide services to members and customers. Industry data and trends associated with these various remote delivery channels serve as a baseline for comparison with the bank or credit union’s current practices in these channels. From this evaluation, a gap analysis is developed for three different end goals:
- Parity: What, if anything, is required to reach competitive parity in the marketplace, and for how long canthat parity be achieved?
- Competitive Advantage: What is needed to establish a competitive differentiation that can be leveraged in the marketplace?
- Market Segment Leadership: What would need to be deployed in the digital channels to become the market leader?
- Development of Digital Transformation Strategy – Utilizing the output from the analyses described above, SRM develops a comprehensive digital transformation plan based on available research, evaluations, assessments, as well as input from the financial institution’s executive leadership. This strategy will serve as a guide for recommended actions concerning the organization’s digital anchors, remote delivery channels, core standards framework, and implementation road maps.
- Implementation Roadmap – SRM can also facilitate development of a roadmap to implement the agreed priorities that will address gaps relating to the three areas defined above; i.e., parity, competitive advantage, and market segment leadership. This roadmap can be inclusive of a broad area of the lines of business within an institution. At a minimum, the roadmap should address the digital and self-service channels. Aspects of the digital transformation roadmap may also provide recommendations concerning organizational and procedural changes that would enhance the impact of this project.
SRM can construct an engagement that includes some or all of these project components. In addition, our firm specializes in customizing an engagement plan that fits a bank or credit union’s unique needs.
Nearly 60 percent of respondents to a Harris survey were dissatisfied with the digital services offered by their institutions.
Billions of Ways We Can Help You
SRM has helped more than 700 financial institutions realize $2.2+ billion in value by providing assistance with critical areas. Our decades of expertise covers a wide area of needs including current state assessment, strategy development, gap analysis, implementation roadmaps, vendor evaluation, vendor selection, and contract negotiations.