22 November 2014

Brits lukewarm on digital-only banks as branch visits increase

14 July 2014  |  10464 views  |  19 Bank Branch Desk with Customer 2

More than half of Brits visit a branch at least once a month and only a quarter would consider using a purely digital bank, according to a survey from Accenture.

Over the last couple of years banks across the UK have begun shutting branches, citing the growing popularity of digital channels. Yet the Accenture poll of 3604 people reveals that physical outlets are still valued by customers.

The young - those aged 18 to 24 - are the least receptive to a bank with no branches or call centres, with only 22% of respondents saying that they would consider using one, compared to 33% of 25 to 34 year olds.

Although 80% of those quizzed bank online at least once a month, only 27% use mobile banking every four weeks, up from 21% in 2012.

A more surprising rise has been seen in the number of people visiting a branch at least once a month - up from 45% in 2012 to 52%. The trend has been even more pronounced among 18 to 24 year olds, up from 39% to 54%.

Peter Kirk from Accenture's financial services group, says: "This year's survey underscores the growing complexity in how consumers want to interact with banks in the digital age.

"The youngest, most tech-savvy-customers still value face-to-face contact as they begin their life's financial journey, whereas older customers who are further along in their work life are more open to a digital-only relationship."

Meanwhile, the survey also shows that banks are winning back the confidence of their customers, with 52% rating their provider trustworthy, up from 43% in 2012. There is little appetite among customers for switching because bank offers are seen as very similar.

However, there is still a threat from non-banks. Nearly a fifth of respondents say that they would consider banking with organisations such as online payment-providers or the post office, and 15% would consider switching to retailers that offer current account services.

Concludes Kirk: "To grow their business and increase market share, banks need to differentiate themselves because customers feel that most banking products and services are more or less the same, and there's not much point in switching.

"This is becoming increasingly important in the digital world as customers are in the driving seat, and they expect the same level of convenience, simplicity and speed from banks to which they have become accustomed from many other service providers they use every day."

Comments: (19)

A Finextra member | 14 July, 2014, 09:08

WOW a quarter of Brits would consider using a Branchless bank - however - the big question is how many of them would actually switch?

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Michael Doyle - Recognex Limited - Tonbridge | 14 July, 2014, 19:08

"Peter Kirk from Accenture's financial services group, says: "This year's survey underscores the growing complexity in how consumers want to interact with banks in the digital age."

I'd love to hear which channels the survey participants were engaged across. 

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Brett King - Moven - New York | 14 July, 2014, 20:56

There are still a lot of false positives here because a large % of banks require face to face for account opening in the UK, not due to regulatory framework, but bank policy related. I think once there is clear differentiation on this from Moven, Atom and others on this front, you'll see dramatically different numbers on channel use.

The data I'm seeing from UK banks is actually different to what this survey tells us. The actual channel data shows that average UK visits to a branch annually is 1.6-2.5 times PER YEAR across the customer base. This number has been steadily reducing since 1995, and nothing in the data suggests that this is slowing or reversing. So I don't see how this survey correlates with that actual behavioral data. 

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Peter Fletcher-Dobson - Kiwibank - Wellington | 15 July, 2014, 02:30

My experience of UK online banking (admittedly now as a non-resident) is that it's primarily a historical transactional view with little future focused financial insight; personal finance management; advice or easy engagement. My current UK bank also makes me go through a tortuous log in process - with a token to boot. It's not a truly digital experience and so probably no surprise people are still forced to us branches. 

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Zaheer Jassat - Santander - London | 15 July, 2014, 09:14

No bank I'm aware of is offering a digital-only onboarding experience, so it's not surprising young people start their financial life journey in branch. That doesn't mean they wouldn't if it were offered to them. How many millenials today have ever spoken to an insurance broker?

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Sarah Appleby - Striata- Financial Services Technology - Rochester | 15 July, 2014, 09:55

I think Peter's point is incredibly poignant. The idea of digital only in an industry that makes digital engagement cumbersome is not a winner. First Direct and soon to be Atom will continue to make this mistake. Banks fancy themselves as digitally saavy organisations yet rely on tech that is old: portals, even apps have not proven to get customers to engage with the new in a way that makes them abandon the old. Portals have not been successful in turning off paper, for example. We need to stop asking customers to shift the paradigm and offer technology that feels the same as their old experience before they'll be true converts.

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A Finextra member | 15 July, 2014, 11:18

It doesn't surprise me that people are using branches more, as the main reason to use them is to talk about mortgages, and the housing market is recovering, particularly as the young are being Helped to Buy.

As for banks forcing you to open accounts in branch - I have opened accounts by mail before after signing up on websites - not sure if that counts, but I certainly didn't have to go anywhere.

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Alex Letts - Ffrees - Sheffield | 22 July, 2014, 09:30

Sorry but this is the most glass-half-full report of a survey I have read for some time.  

1. You are forced to go into High St branches by the currently facile protocols enforced by the monopolists (see Brett's point above)

2. "Only" 25% of people would use digital.  Given the low penetration of digital banks (as in currently next to nil) this is an astonishingly HIGH figure

3. You can bet that the figure for willingness to use digital will be 40% by next year and it will go on growing. 25% is already one quarter of UK and probably currently about 8m customers. Wow.

I am susrprised by Finextra's one-eyed view on this survey, which for me simply underlined the fact that the retail banks have to reinvent themselves to protect their maket share.

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James Piggot - Misys - London | 23 July, 2014, 04:37

If you are elderly and do not know how to use a computer, or you are young and want to deposit grannies birthday cheque in your savings account, or you are a small business depositing cash takings, then you may find visiting a branch is your only option for the time being?

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Brett King - Moven - New York | 23 July, 2014, 04:50

James,

Seriously grannie's birthday cheque is the best use case you can come up with for a branch that costs £2m a year and runs at a 25% loss?

BK 

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James Piggot - Misys - London | 23 July, 2014, 05:11

Brett, I'm hoping my comment will accelerate adoption of scanned cheque deposits then will probably never have to visit a branch again!

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A Finextra member | 23 July, 2014, 10:13

Good point about cash deposits though.  Maybe we'll need very secure drop boxes on street corners, and banks will be hiring all the redundant postmen to go and empty them?

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Brett King - Moven - New York | 23 July, 2014, 18:31

Finextra Member,

Sit in a branch for a day and see how much time the teller line spends on cash deposits, then ask yourself whether the cost of carrying the branch for another "cost" is going to save the business case for the branch...

BK

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Peter Fletcher-Dobson - Kiwibank - Wellington | 23 July, 2014, 22:47

The cynic in me thinks branches still only exist because banks perpetuate ridiculously complicated customer experiences to accommodate ridiculously complicated product structures devised to work around ridiculously complicated back-end systems, bloated over the years to prop up a business model relying on complexity. This creaking levee of obfuscation is about to be swept away in a tidal-wave of transparency thanks to the mobilisation of the internet. It's unleashing a once-in-a-century event - probably the biggest innovation since central banks. Banking is no longer somewhere we go, it's something we do. We won't necessarily be doing it with banks (let alone branches) and it's going to happen way faster than we think. 

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A Finextra member | 24 July, 2014, 09:17

I wasn't really talking about the business case - I was talking about the necessity to deposit cash.  If it's not worth it for the banks, then we'll need to go cashless pretty quickly.  Bring back Mondex - that was the greatest invention - we had it on our uni campus.  Far more interesting than Bitcoin...  ;)

By the way - I'm Will.  Haven't found a way of exposing my name without my company!

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Alex Letts - Ffrees - Sheffield | 24 July, 2014, 09:27

Peter's comment is one I shall try to re-tweet.  Setting aside the messianic tone ;).....he is on the money.  And he gets why the banks are in a mess (partially) and why the digital tide will wash them away. 

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Peter Fletcher-Dobson - Kiwibank - Wellington | 27 July, 2014, 23:40

Too many shots of coffee before writing Alex... ;-) However, I get quite agitated by the nonchalance of many bankers who seem to feel their industry model doesn't have the same vulnerabilities as others that have been transformed by digital. Just look at how quickly digital third parties are creating disruption in traditional banking areas like lending - I read digital P2P lending is 3% of all non-mortgage lending in UK now. Payments is obviously the other key one already being transformed by mobile.

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James Piggot - Misys - London | 28 July, 2014, 08:38

The most amusing thing is the title of the first related article below -

Branches on the precipice as Brits embrace digital banking

Difficult to reconcile the two stories?

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Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 28 July, 2014, 09:15

@JamesP: Good catch! However, old adages like "change is the only constant" are very useful to explain away such "minor anamolies":)

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