When it comes to making financial transactions, people are deserting branches in their droves and opting instead for their mobile or online. The CMA’s recently called for the industry to create an open banking mobile app, that will give people easily accessible information about the best accounts, rates and charges available.

With the smartphone market reaching saturation point, there is simply no excuse not to invest in developing a feature rich banking experience. This includes everything from checking statements, to transferring money, paying bills, depositing cheques, opening accounts, and real time customer service.

In our global research into the top 10-15 percent of earners, we found that 81 percent used apps to manage their finances, and almost two thirds (63 percent) agreed they made digital payments whenever possible. The key to business success has always been to be where the customer is. In decades past, this led to the deployment of country-wide branch infrastructure, but as the digital revolution took hold, that investment now looks precarious at best.

Banks are under pressure to cut costs whilst improving customer services in order to retain customers – one way RBS is attempting to do this is by trialling a new artificial intelligence system on their phone systems. Other banks are also experimenting with new ideas—such as being a hub for click and collect purchases—in an attempt to maintain a purpose of the branch for customers.

The fact that 46 percent of respondents would consider a branchless digital bank if they were to switch in future is the loudest, clearest signal yet that change is coming. With banking licences for digital exclusive banks, like German challenger N26, becoming more common, you can begin to understand just how impactful this disruption will be.

When we asked how people like to bank, the results are evenly split in four. 26 percent prefer visiting a branch, 24 percent bank via an app, 29 percent favour using the website, and 21 percent over the phone. The accepted reasoning for this is because discussing a mortgage or a loan is still something people would rather do face-to-face, while sorting out a problem is always easier over the phone. It is nevertheless significant that a banking app is almost considered equal in experience terms to the branch.

The future of digital engagement relies on tapping into what customers truly want, and delivering services that excel on mobile. When we asked how important digital banking was to consumers, 63 percent answered ‘very’. For mobile banking, this was 57 percent. Therefore, it seems obvious to claim that consumers the world over are demanding banks launch and improve their digital offer. But how can they do that?

The answer comes in studying consumer behaviour in adjacent industries. Fuelled by technology and the rise in prominence of millennials, global society has flocked to on-demand culture that prioritises convenience. We binge-watch whole TV seasons over a weekend instead of an episode every week. We summon cars at the tap of a screen, and we wait at home for our groceries to come to us.

The banking industry needs to emulate this digitally as the millennials and the next crop, Generation Z, become even more important over the next five years. The industry needs to place the customer experience at the centre of product development. Looking at the services that customers value, we see that convenience resonates in banking too. The most valued account add-ons, according to our research, are health insurance, travel insurance, lost card assistance, vehicle breakdown recovery and identity theft protection. And yet, how many banks are using their digital platforms to sell these services? Travel insurance obtained via a bank was the most popular add-on, but even that was only obtained by 18 percent of our survey’s 6,000+ respondents. Imagine if banks effectively marketed these services, expanded into new areas like airport lounge access, and managed all interactions too. The customer would instantly feel a closer affinity to their bank, something that would go some way to upping the degree of personalisation offered as well as raising trust scores too.

If the banking industry wants to go further to expand their digital offering, they should look into integrating their payments platforms into their services. Apple, Samsung and Google have all taken advantage of this – Apple Pay now even accounts for three quarters of all U.S Contactless Payments. Although some banks have dipped their toes in the water with their own attempts, none has a proven outwardly successful. 38 percent of the affluent global middle class has a digital wallet installed their phones. When we look at the demographics within that, we see 26 percent are Baby Boomers, 38 percent are Generation X, and 46 percent are Millennials. The trend is clear, customers are using mobile for almost everything. It is almost as if the customer has now become the point of sale. They choose the platform and the services they want, and if this doesn’t meet their expectations, they will move on.

We saw a four percent rise in consumers agreeing that they receive a consistent experience across all channels, including digital and mobile, over the past 18 months. However, this could be in jeopardy if investment in the digital experience does not continue, leaving customers to feel their needs are not being met.

Rewarding customers with targeted offers based on spending is one way to drive loyal customer behaviour. For example, if a bank could notice if parents had just been on holiday with their kids—thanks to hotel and hire car bills, alongside foreign exchange charges—they could offer a discounted spa weekend once they returned. This takes engagement to an emotive level that is much more likely to strengthen the customer relationship.  However, as Nate Vickery points out in his latest blog post, added value giveaways such as T-Mobile’s gifting application, can back-fire if the platform on which  the service is launched doesn’t meet the customers’ expectations.  

Large institutional providers may not find it easy to implement such an adaptive strategy, but the danger is, for those that delay, challengers are already forging ahead. They also come from a culture where engagement is central to everything they do. Digital and mobile are the future, of that there can be no doubt. The winners will be those that fully grasp how important delivering an unbeatable customer experience is.