What Retail Banks Miss Out On Without Digital Advice Platforms
Differentiated and value-added services have become critical to achieve success for the banking industry in the digital age. However, retail banks seem to be missing out on offering an important service that ensures customer loyalty – that of providing financial and wealth management advice to their customers through their digital channels.
A study conducted by J.D. Power’s 2018 U.S. Retail Banking Sales Practices & Advice surveyed 3,841 retail bank customers in the US. Participants were mainly from 17 large US retail banks, who sought advice on account opening processes and other banking activities.
The findings showed 78% of these retail bank customers were keen to receive financial guidance or advice from experts, while only 28% actually received it. Also, while 45% customers are likely to receive banking-related advice online, only 33% felt their needs were met through email. The study suggests that this was the case despite users signing up for digital guidance on a number of topics including savings advice, retail banking to retirement investments.
It’s clear that retail banking is not addressing customer requirements if they remain impervious to the radical impact of providing digital advice to them. The study shows that customers commonly sought quick financial updates (41 percent), advice related to investments (39 percent) and retirement planning (35 percent), and retail banks can step in with their expertise on these for sure.
Through digital customer interaction platforms, retail bankers can also help users to know more on bettering their budgeting skills, spending and saving for large purchases – all aspects that ensure they stay relevant to their customers and make their experience compelling.
Other suggestions to make inroads into previously untapped customer segments include stepping into providing traditional wealth management advice, which was earlier only reserved for corporate or rich customers. Implementing robo advisors would bring into purview those who do not already qualify for traditional advisory services.
Paul McAdam, senior director of the banking practice at J.D. Power says, “The largest retail banks will have strong incumbency advantages over technology companies when it comes to digital offerings. In the context of retail bank customers, third-party services like Mint or robo advisors have low penetration. Mobile banking adoption is now at 52 percent, so an existing customer base is already in place for those digital offerings.”
Digital advice in the retail banking sector can rapidly progress to newer heights, expanding in scope and reach and navigating new terrain. Clients across all age groups are more comfortable and tech-savvy using services online over in-person advice. Having a good digital advisory platform will only further the cause for retail banking to transform their approach.