Rob Walls, Head of Product, Visa Australia, New Zealand and South Pacific, looks at how banks should tackle the challenges of winning new digitally savvy markets.
Digital experience plays a greater role in influencing how Australian consumers feel about their banks than it does with other service providers, such as retailers and utilities. Recent research conducted by Visa and RFi Group explores how Australia’s banks are faring with digital consumers and what it means in a time of rapid industry transformation.
In good news for the financial services industry, 33 per cent of consumers rated Australian banks as providing their best digital experience, versus 21 per cent who indicate online retailers and 12 per cent who indicated a telecommunications provider.
Ease of experience (56 per cent), which consumers typically define as easy navigation, user-friendliness and a logical look and feel, was identified as the greatest driver among consumers who indicate their best digital experience is with a bank. Simplicity, intuitive design with as fewer fields to populate as possible are cornerstones of great mobile experiences across any industry, with Australian consumers scoring mobile banking highly in this regard.
While innovation in digital banking is ramping up all around the world, it’s clear that Australia’s banks are leading the way both locally and globally when it comes to offering outstanding digital experiences to customers. The continual investment in the design and features of online banking apps and services is paying off.
The digital experience challenge: Pioneers to push for innovative digital offerings
Using a mix of consumer demographics, levels of device ownership and usage, lifestyle factors and digital banking behaviours, Visa and RFi Group have identified a new way of understanding how customers engage with digital services. Customer segments include:
• Pioneers are highly digitally engaged with financial institutions and who also lead a highly digitally active lifestyle;
• Converts are highly digitally engaged with financial institutions, but who do not lead a digitally active lifestyle;
• Sceptics show lower levels of digital engagement with their financial institutions despite an active digital lifestyle; and
• Traditionalists show low levels of digital engagement in all aspects of their lives – banking and lifestyle.
It is the highly digitally engaged Pioneer group that holds the most value for Australian banks.
The Pioneer group is predominately made-up of 16-35 year olds, who have 16 per cent more than the average income, are 55 per cent more likely to hold a personal loan and are 21 per cent more likely to hold an investment product than average consumers.
However, consumers under age 25 are less likely to pick banks as the provider of their best digital experience, instead choosing social media and online entertainment providers. Sophisticated digital banking customers are increasingly having their expectations shaped by interactions with other industries. While banks are currently the leaders in digital experience, there is a risk of complacency if they don’t continually adapt and offer new features and services.
To win the competition for Pioneer customers the banks should look to the industries and experiences Pioneers are attracted to and appropriate the best of these experiences. If the banks want to win this group, they could consider adopting the following approaches:
• Digital benefit propositions for premium credit cardholders such as reward redemption channels, bonus point or reward program participant finders and partner programs with major online retailers;
• Points tiering and bonuses to encourage and win share of online, cross-border spend and overseas travel spending;
• Digital travel products such as travel planning apps, spend trackers and management tools for lost or stolen cards when overseas; and
• Increasing customers engagement and control via card control, activity based alerts and personal financial management tools such as cumulative spend controls and transaction limits.
Challenges not unique to banking
Business in all sectors are being challenged by increasingly digitally engaged customers to deliver a high level of usability and service through their online channels.
For example, the research found forced channel migration, where interactions with a brand can’t be completed in the customer’s preferred way of communicating, is a source of friction. Looking outside of the businesses own ways of doing things and taking inspiration from other types of brands can come up with new solutions which could reduce the amount of forced channel migration.