Understanding the Three Levels of Bank Customer Engagement
As the banking industry evolves with new technology, customer attitudes are shifting. A national US survey of 1100 respondents conducted in February 2017 by SLD was conducted to better understand customers today in order to address their needs.
One of the main insights from this study was the a key differentiating factor that divided respondents into three groups based on their level of engagement with banking. Engagement refers to how connected and loyal customers are to their bank and how actively they use its services. It is an important variable to consider since low engagement could lead to switching to another financial service provider.
Group 1, making up 35 percent of those surveyed, appeared to be disengaged with banking. When asked to select how they feel about their primary banking service provider, they described it as something they “have to use to access money” or “don’t really think about”.
Group 2 accounted for 37 percent of respondents and reflected a medium level of engagement. They described their relationship with their primary banking service provider as “a good place for a checking account” or “meets my day to day financial needs”.
Lastly, Group 3 included 22 percent of respondents. This group reported a more trust-based relationship with their primary bank, describing it as “a trusted relationship with long-term benefits” or a “resource for professional financial insight and advice”.
These results show that approximately 72 percent of respondents feel that their relationship with their primary bank does not focus on trust and advice, which are two factors that can lead to stronger loyalty. This finding may be troubling to financial service providers looking to discourage switching to competitors.
The first step to shift the banking relationship towards trust and advice is to better understand these three types of customers. The below information will help to move towards that goal.
Group 1: Low Connection to Primary Bank
A considerable portion of this group expressed that they are somewhat disengaged with banking in general. Group 1 had the highest percentage of respondents that use only one financial app as well as one financial institution, which was most likely to be a large bank. Yet, this finding appears to be due to disinterest or dissatisfaction rather than loyalty, since they also had the lowest frequency of banking activity out of all the groups and were the least likely to visit a branch. In addition, this group was the least interested in consideration of their well-being and future goals, and appeared to have a transactional/functional mindset about banking. In fact, group 1 was the most likely to have changed their bank branch in the past 6 months.
Another large section of this group may be willing to be more engaged with banking services but are dissatisfied with their primary provider. Group 1 reported the lowest levels of trust and satisfaction with their bank and are more likely to consider alternate services and look for better rates/products. They were also the least likely to go to a bank manager/staff member for financial advice, and more likely to use google/online search or ask a friend/family member instead.
Group 1 reported that they would be more likely to visit a branch if there were friendlier, more knowledgeable and helpful staff, and a more comfortable and enjoyable experience.
This group skews male, and has a mix of education levels, incomes, and ages.
Group 2: Medium Connection to Primary Bank
Convenience and Customization Seekers
Group 2 has the highest preference for online banking, reporting that it makes day-to-day banking and paying bills faster and easier. If their need for convenience and customization is not being met by their primary provider, they may seek out alternatives. This group is the least likely to have no financial apps from other institutions, yet report that they would consolidate services into their primary provider or add more products from them if there was more consideration of their well-being, loyalty, and goals of saving money.
Basics Being Met by Primary Bank
Group 2 reported that their basic financial needs were being met by their primary bank, and had average customer satisfaction levels. They also had a high level of trust in their financial institution.
Group 2 skews female, nearly one fifth are aged 21-29, and 55% have bachelor or graduate degrees. This group also skews towards a higher than average income.
Group 3: Strong Connection to Primary Bank
Group 3 has the highest frequency of branch visits and are the most interested in space in a branch for small business/community/seminars. They are more likely to go to a bank manager/staff member for advice and a higher percentage than average use a smaller bank or credit union instead of a large bank. They are interested in consideration of their well-being, plans for future goals, business needs, loyalty rewards, and goals of saving money.
This group has high satisfaction and trust with their primary bank, are the least likely to consider using alternative services or shop around for better rates/products. They reported that they would visit their branch even more frequently if it was made more fun and exciting.
Preference for In-Branch Banking
Group 3 also appears to be somewhat resistant to change or to digital/new channels, since they are the least likely to have moved their banking to online in the last six months or to have started using non-banking services.
Group 3 skews older (43% are aged 50+) and skews lower income, although it also has the highest percentage of respondents with a household income exceeding $200 000 per year. These respondents are more likely to have a college/associate degree as their highest education.
These three groups show clear distinctions in customer attitudes and behavior in banking. This information can be used to better connect with each customer group to build loyalty.