May 172011

American Banker writer Jeff Horwitz recently published a story entitled “Tech-Savvy Crowd Demands More Personal Service from Banks, Not Less“.  The article works hard to “debunk” the notion that mobile banking is critical or ROI generating activity.  In fact, Mr. Horwitz goes on to recite that new research by Novantas LLC, Forrester Research and others suggest that “… mobile may have its limits as a way to entice tech-savvy customers, reduce branch use and cut costs. Depending on how it is deployed, it can even result in more phone and branch contacts.”

We come away more confused rather than anything else from the analysis presented in the article as it appears to confuse several key factors

  • A new channel is unlikely to generate incremental transaction needs by the consumer. As such, mobile will necessarily replace other channels. However, it is fair to say that in the short-term the limited functionality, poor design, and other limitations of the mobile services may increase transaction / support volumes in other channels.
  • The study appears (disclaimer: I did not read the study and base this purely on the article) to define ultraconnected as young and affluent. Most will recognize that young and affluent rarely go together, thus the conclusions reached immediately deserve an asterisk. These two customer segments need and expect very different things from their Bank and from their Banking Relationship.
  • Perhaps the most interesting observation made is that mobile users utilize branch services more than less electronically adept peers. This seems entirely contradictory to the notion of mobile services (and really all virtual services), which is of course to complete banking transactions WITHOUT visiting a branch. Again, I suggest that these findings are the result of comparing a unique customer segment (eg. affluent) that is more likely to use the branch for advisory and/or other value-added services. The fact that Affluent consumers may use the branch more often (eg. for loans, investments, trust, complex banking transactions such as wires, and small business needs) should not be surprising but this has nothing to do with mobile.

The other fascinating item in the article was the stand-alone graphic of the top 5 reasons why ultraconnected would switch banks:

There are several interesting implications here:
1)  Pricing is key! Consumers – and in particular – Affluent Consumers are price sensitive and expect a fair return (this is consistent with a recent Capgemini study)

2) Surprisingly bad service ranked very low as to the reason of why this demographic would leave a bank. Maybe it is because most of them transact the vast majority (eg all) of their business online!

Serge Milman

Serge Milman is the Principal Partner of San Francisco, CA based SFO Consultants which provides Strategy, Finance and Operations Management Consulting services. He is also the Principal of Optirate – a blog dedicated to growth and profitability strategies for Banks and Credit Unions. Serge can be reached at

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