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Why Banks Need to Get with the Virtual Program

This is why traditional banks need to stay on top of their digital offerings in online banking to both keep and win customers.
December 19, 2023

The pandemic shifted consumer banking online - and it isn’t going back. In 2021, three quarters of US adults banked online, including many new customers that opened accounts, downloaded mobile banking apps and established new habits that offer more convenience and flexibility.

While online banking isn’t new, the pandemic made it clear just how important it is for every bank to prioritize a digital presence that empowers customers to perform a wide variety of banking processes online. It’s no longer enough to allow people to check their balance or transfer money, customers want total remote banking, and that requires banks to up their offerings.

Digital services build loyal customers

Customer experience is king, and customers are looking for convenience and flexibility when it comes to banking. A recent survey from Chase found that 99% of their Gen Z and millennial customers use online banking for a wide variety of tasks including budgeting, checking credit scores and creating savings goals.

Younger generations are not as interested in going into a branch to get customer service, and are leaving traditional banks that don’t offer similar services online.

For example, Ally bank is a fully online bank, and it boasts more than 2 million depositors. The bank has also issued car financing for more than 4.5 million customers. All this from a bank brand that had to build a customer base without any face-to-face interaction. Banks that do have in-person customer relationships can learn from Ally to add to their brick and mortar presence with a robust virtual offering. 

One in five adults have switched banks in the past two years, even though many report that they were satisfied with their old bank. The main takeaway here is that satisfaction isn’t enough to gain loyalty anymore. It takes more to earn a loyal customer, but traditional banks who can offer extensive online services have a better chance at retaining their current customers as well as winning back some customers that have left.

Offer the best online banking experience

Many traditional banks know, in theory, that digital banking is here to stay, but are unsure of how to improve their digital experience. There is also fear that digital banking is less secure than traditional banking. While cyberattacks do exist, digital banking is safe, and the majority of customers are comfortable with the minor risks that do exist in exchange for a convenient banking experience. Here are four strategies to get with the virtual program:

  • Prioritize what your customers want most. For banks with a large number of older customers, they may want the ability to track their retirement savings or draw from a recently deposited social security check, while younger customers want instant loan approval and convenient mobile payment. Every customer is different, so it’s important to survey your own customers to understand exactly where to focus first.
  • Design for customer experience. Millennials are the primary customer base for the next ten years, followed by Gen Z. What they want in an online experience is informed by their interactions with companies like Amazon and Instagram. Online banking experiences need to be seamless and intuitive to catch their attention and keep their loyalty.
  • Get your employees on board. Traditional banks need to spend the time and effort to educate employees on the convenience and value of online banking. For banks with local branches, customers should be able to come in with their mobile banking app and get a seamless in-person experience. This requires training and a culture shift.
  • Embrace innovation. The benefits of placing importance on online banking is that there are a huge number of banking technologies that can be incorporated into the customer experience. Start with innovations that create the biggest improvements or time savings. Take online notarization as an example. By providing this service, customers can close on a loan from anywhere, without the need to find a notary and close in person.

Unify the customer journey — online and offline

While a great digital experience will create loyal online customers, the best approach is to ensure that no matter which experience a customer chooses, they feel like it is a seamless one. With each advancement to your virtual offerings, make sure to think through the customer journey to ensure that it’s as cohesive as possible.

For example, a lot of people shop for loans and search for better interest rates online. This naturally leads them to apply for a new account or loan online. What happens when that application process requires them to pick up the phone or go into a local branch to complete the transaction? The answer is that the customer journey is interrupted. Many people may abandon the process if the in-person step is too inconvenient.

It’s important for banks to analyze the common customer journeys across both digital and their brick-and-mortar locations to see where they might be losing customers. These points along the journey are great opportunities to improve the experience with better digital capabilities and gain more transactions in the process.

With every advancement in digital banking, there are new opportunities to make even more improvements. Getting ahead now can ensure that you keep current customers and win more new business before they go digital with someone else.

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