The rapid proliferation of mobile banking raises the question of where online banking will fit in the future. As mobile becomes the preferred channel for basic transactions, Javelin predicts that online banking will have to deliver a richer experience defined by insight, coaching and advice, trust building interactions that will drive consumers to their primary FI for loans, wealth management and other services.“The initial justification for encouraging people to use online banking was cost savings,” said Ian Benton, an Analyst with Javelin’s Omnichannel Financial Services practice, during an April 27 webinar. “We’re now down the rabbit hole where people are using online banking (71% adoption) so how can we use that to bring up the revenue side and justify us improving and maintaining this channel?”
Javelin encourages FIs to highlight online banking features that are best accessed and used on the larger screen of a PC, laptop or tablet. These include transaction categorization, cash-flow analysis, net-worth insight, text and video chat and gamification, specifically visualizations allowing customers to track progress toward their financial goals and benchmark against peers. FIs must facilitate “both short and long-term approaches to personal finance through highly visible tools woven into every aspect of the online experience and relying on aggregation and transaction categorization to provide insight and advice,” writes Javelin in its Online Banking Forecast 2016: Optimizing Online Banking In A Mobile Era. Online banking is further touted as an ideal channel for FIs wishing to demonstrate that they are partners in a customer’s financial journey, a position reinforced through the offering of “personal financial management tools that help consumers gain control of their financial lives.”
While the percentage of banked U.S. adults logging into online banking on a monthly basis has increased from 35% in 2004 to 71% in 2015 (169 million consumers), mobile banking adoption is expected to nearly match online banking — projected at 81% — by 2021. Online banking is gradually losing its status as the primary channel for activities ranging from paying bills and transferring funds to monitoring account balances and reviewing statements. The rise of the mobile-first consumer, the 23% who reach for a smartphone or tablet first when conducting banking, is forcing FIs to rethink online banking. To take advantage of laptops and PCs, FIs will have to focus on a “full meal” user approach vs mobile’s “quick bites,” providing a deeper dive into one’s financial picture. This could mean cash-flow analysis or even visualization of debt obligations, accompanied by offers to help customers refinance or consolidate loans.
The Mobile-Only Myth
The mobile channel’s growth has been impressive but the reality is that consumers are still using multiple channels — mobile, online, ATM, branch, call center — and FIs must continue offering an omnichannel experience that meets consumers where they desire. “‘Right channeling’ was a huge thing in the industry for awhile. We were actually pushing customers to a specific channel. ‘No, it costs too much to do that in the branch, let’s push them online.’ That assumed that the customer was ok with being pushed,” said Emmett Higdon, Javelin’s Director of Mobile. “No, the customer will go to whatever channel they please. And as we embraced that they went to more and more channels.”
Interestingly, Gen Y.2 consumers (25-34), whom many would identify as mobile enthusiasts, use an average of 3.4 channels. This represents the most for any age group. Javelin notes that while younger consumers are driving rapid adoption of mobile banking, they’re at the same time “cobbling together online banking, branch banking, ATMs and live and automated phone-based customer services to take advantage of the benefits that each channel uniquely offers.”
Online Growth Must Be Driven By Older Consumers, Better PFM
For years growth in online banking was accompanied by a rise in the number of Americans with Internet access, which has grown from 63% in 2004 to a projected 89% in 2015. Internet usage has reached its saturation stage among younger consumers — 97% of consumers in the 18-29 age group have online access — so future growth in online banking must be driven by older consumers, who have been less inclined to use digital services. Fewer than 22% of consumers over 60 have adopted mobile banking. Convincing them to use online banking will not be easy either. Many older consumers have avoided online banking because they prefer dealing with people, do not find it valuable, fear that their account information is not safe or feel they have more control of their finances by managing them offline. Javelin notes that this is “an indicator that planning and PFM capabilities typically offered within online banking fall short.” FIs clearly have an opportunity to optimize online banking “around aggregation and personal finance tools that guide older customers through the complexities of this stage of life.”