Will The Power of Mobile Make Bank Branches Disappear?

The high rate of mobile banking penetration at Chase Bank, Bank of America and recently introduced direct banks such as Simple, GoBank, Bluebird and Moven could provide a significant business advantage as digital channels tend to build loyalty and provide the opportunity to reduce costs through transaction migration. 

A recent report from Bain & Company entitled, 'Customer Loyalty in Retail Banking' found that mobile banking is more likely to increase a customer's likelihood of recommending the bank than any other channel interaction and that features such as remote deposit and even the ability to check a balance impact loyalty. The research also found that once customers moved to mobile, roughly half stated they made fewer visits to the branch which can lower costs.

Digital Delight

As mobile banking use increases, banks have the opportunity to 'delight' customers with new applications and functionality. For instance, while remote deposit capture still represents just a small percentage of branch and ATM transactions (as shown by the size of the circles below), it is by far the most likely to 'wow' the customer (64%) and provide the opportunity to recommend the bank. 

Interestingly, even routine mobile transactions such as checking a balance or transferring between accounts has a likelihood to delight (44%) and is a strong influence on loyalty according to the Bain study.

The Mass Affluent: An Elusive Bank Target

While targeted by every bank, mass affluent households are difficult for bank marketers to reach. They have a distinct lifestyle from the rest of the nation in terms of media consumption, technology use, financial attitudes and preferences for financial products and services.
 


Representing a sweet spot between the mass market and affluent segment, the mass affluent segment is not homogeneous, but a diverse array of micro segments that differ from each other. To reach this group, new products and services need to be developed, new messaging needs to be used and varied channels need to be leveraged.


Three recent studies help to shed light on the opportunities and challenges presented by this highly sought after segment.

According to Nielsen, the mass affluent segment consists of more than 13 million households and represents approximately 11 percent of all U.S. households. The segment is defined as having income producing assets between $250,000 and $1M (excluding real estate) and an average household income of $105,000 in 2011. This income is more than 50 percent higher than the national average household income of $62,912. In depth analysis also shows a high correlation between income and assets for targeting purposes.