Self-Service Migration

Migrating members to self-service channels is seen by many in the banking sector to be a panacea for plummeting profits.

On average, a call to a U.S. call center costs $7.50, which you can read more about on Mashable. Placing that same call into an automated or interactive voice-response system can cut that to just 32 cents. That is a massive 96 percent reduction in cost per call.  

Similar numbers exist for branch vs. online, digital or ATM transactions. With regulatory pressures and declining profits, it is hardly surprising that so many are prescribing a self-service migration strategy, believing it to be a cure-all for the retail banker’s woes.  

But like any medicine, its effectiveness depends upon following doctor’s orders. And for that to happen, it is imperative that the strategy is founded on a deep understanding of your customers (or members) as we wrote about in a previous blog post “What Customers Wish Banks Would Improve.” Even more specifically, you need to know how your members feel about additional and different channel options.  

Don’t Assume Universal Truths in Banking Self-Service

We can probably all make some educated guesses about the needs and preferences of different types of members. For instance, we might say that preference for digital channels is negatively correlated with age – older members are less inclined to rely on digital or mobile.  

We’ve done a lot of customer segmentation research for a variety of regional banks over the past two years. In that time, we have been surprised on a number of occasions by how customers in different demographic segments behave. Originally, we, and the banks we worked with, went into this research assuming that digital natives will choose remote channels every time and older customers will be the hardest to shift away from in-person branch interactions.

Our assumptions have been challenged due to their customer feedback and data. Your member segmentation strategy may also be affected by this. You need a degree of surgical precision to maximize the success of your self-service strategy.

Will Digital Natives Primarily Adopt Remote Channels?

A commonly held belief is that members of the millennial generation (age 18-34 years) will opt for   mobile and online banking channels over in-person or phone for the vast majority of their banking needs.  

The Young Are Going to the Branches, too Often

While tech adoption and penetration of smartphones and tablets was far higher for the 18- to 24-year-old set, our bank client discovered that 93 percent of its younger customers had visited a branch at least once in the prior month. This was 20 percent higher than the proportion of customers 55+ who said they had visited a branch for an in-person interaction.

Their Economic Status is Forcing Them to Branch Out

Digging deeper we discovered that many of this bank’s millennial customers described themselves as living “paycheck to paycheck.” These young customers were visiting the branch primarily to cash their pay checks – they need access to their money immediately. The requirement to wait for funds to clear was a barrier to ATM and RDC usage.

Policy Has to Change to Adapt to These Customers

Knowing this, the bank is considering a policy change that will allow customers faster and easier access to funds deposited through ATMs. There is a potential to introduce a no wait period for deposits up to a certain dollar amount. Another change that can be done is adding newer ATM technology with image-enablement that would make this type of policy more feasible and less risky to the bank.

How About Baby Boomers?

One hypothesis – supported by feedback from branch employees who say they know their older customers by name – is that the baby boomer generation will be the hardest to shift away from in-person interactions at the branch. They are most familiar and comfortable with the personal touch they get from their local branch.

You’re Losing Upwards of $7 When They Call

While many of the bank’s older customers did choose to visit the branch, we also learned that the 55+ age group had the highest contact center usage. Forty-percent of these customers were calling the contact center to speak to a live agent at least once per month. And the primary reason for calling was to check their bank balance or transaction history.

They Are Physically Unable to Get to the Branch

In reviewing the feedback from customers, we learned that many of these older customers are house-bound or unable to travel to the branch with ease. Perhaps they no longer drive, are disabled or need assistance. For these reasons, they were choosing to call and speak to someone – the next best thing.  When we dug deeper to understand why they were selecting a live agent, rather than accessing their balance information through the IVR, it was clear that for this particular bank, the instructions and set-up were confusing.

Restructure Technology to Meet These Customers’ Needs

The bank decided to borrow from other industries that are doing a stellar job of adapting the experience they deliver, based on the information customers are likely to need at any given point. For instance, many hotels will change the website you see after you have made a reservation –replacing general information with specific information about what is going on at the hotel and the area during the dates of your stay.

Building on this idea, the bank is looking at how their IVR is structured and re-configuring the menus and information so the most commonly required information is shared up front –thereby circumventing the need for the customer to speak to a live agent.

Have a Better Self-Service Migration Strategy

There are other examples where a deeper look at customer and member behavior and motivations has revealed surprising findings that have altered the planned strategy for self-service migration. My advice to credit unions is to:

• Start with a deep dive investigation of your members’ needs, wants and preferences by demographic characteristics such as: age, income, lifestage, etc.
• Couple quantitative findings with qualitative insights – how are members explaining their responses? What words are they using to describe the why behind their behaviors or assumptions?
• Be willing to learn from outside your industry and adapt external best practices to your self-service tools.

Want to read more into the MECx banking industry research and get a base for your strategy? Click here to download a copy.

Kate Feather is executive vice president of PeopleMetrics, where she leads the customer experience transformation group. In this role she acts as strategic consultant on key accounts such as Christie’s Auction House, Coca Cola, and Johnson & Johnson. In addition, she leads all research and development projects, is a frequent speaker and contributor to publications on topics relating to the customer experience, and has developed and tested the engagement models that heavily inform the PeopleMetrics research. Contact her by email, phone (215.979.8037) or on Twitter.

Photo credit: Dollarphotoclub.com/HappyAlex