Retail banking,Online banking,Net Promoter,Retail,Cost,Consumer

Retail Banks' Salvation Lies In Mobile Adoption By Consumers

December 28, 2016

By Gerard du Toit and Maureen Burns Delight customers, and costs will drop out. It might sound counterintuitive, but this approach can change the trajectory of profits for established retail banks. Consider an $11.4 billion annual opportunity for the 25 largest US banks, if these banks reached the level of mobile and online banking usage of their counterparts in the Netherlands. Each mobile interaction incurs a variable cost of about 10 cents, a small fraction of the $4 cost for a teller or call-agent interaction. As interactions migrate to mobile, a bank needs fewer tellers and call-center agents. So the 25 US banks would save $11.4 billion annually in aggregate, Bain & Company estimates, if customers’ branch and call-center usage declined to the Dutch level, and the banks reduced headcount accordingly. The US banks would also improve their Net Promoter Score —a key metric of customer loyalty—by an average 12 percentage points, Bain estimates. That’s because mobile interactions are far more likely to delight customers than interactions at branches or through contact centers. Realizing the fruits of the mobile revolution will require astute management. Banks will need to improve their mobile applications to make them truly easy and convenient, and they will have to get more active in guiding customers to mobile self-service, especially older customers. Too often, this group has been overlooked by banks, which typically neglect to give older consumers guidance or even much information about the benefits of using mobile apps. Bain’s new global survey of 137,034 consumers in 21 countries suggests where banks should...

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