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Consumers shunning bank marketing in favour of online research

13 September 2010  |  7697 views  |  2 biometric  face pointer

New research from Google Finance shows a significant shift away from traditional bank marketing materials and brand influence to online sources in the selection of retail financial products by consumers.

The research comes from a sample of 900 Australian consumers who were asked to find ether a deposit product, a credit card, or a mortgage and report back on the process they used to make their choice.

The vast majority (88%) of customers started their journey online, says Google, which released the data at its annual ThinkBanking event held in Sydney.

For deposits and credit cards, 78% of time spent researching options overall is done in the digital space, for an average of 3 hours and 20 minutes. (that's up from 58% in 2008) For mortgages and home loans, 62% of overall research is done online, with consumers spending upwards of 11 hours and 25 minutes before settling on a product. More than three-quarters (77%) of those surveyed said that they didn't know about the product they finally chose before they started the task.

The majority (51%) of customers had a preferred brand when they started, but of those that used search to attack the task, 58% didn't search for their preferred brand, but instead explored a variety of independent resources. Of those that started with a preferred brand, one-third (31%) ended up selecting a different bank.

The shift to online behaviour is also pronounced during the application process, with 68% of those surveyed preferring to apply online, compared with just 29% who opted for the branch experience.

"The results are a shock to those expecting traditional marketing methods to strongly influence customer behavior in respect to product selection in the financial services space," says social media expert Brett King, who released the dataset to Finextra. "The data shows a significant shift in behaviour when it comes to the selection process. Traditional marketing theory suggests that brand marketing and campaign marketing are strong influencers of behaviour when customers are selecting products, but this most recent data flies in the face of accepted theory."

Comments: (2)

A Finextra member
A Finextra member | 13 September, 2010, 19:42

We surveyed 5,200 US consumers to find out another type of essential information: *why* consumers decided to open a new account with a bank. What we learned is essential information for the onboarding process, yet our surveys of banking executives shows that it's often left out of the process. Interestingly, we learned that the customer's desired communication channel or venue (text message, phone, branch, etc.) is largely predicted by their previous banking experience: did they switch from another provider, are they newly-banked, or are they underbanked? Mobile banking is taking on an increasingly important reason in causing individuals to switch accounts, yet it's hard to trump the import of the overwhelming drivers such as a relocation (which ties in with ATM or branch access), customer service and fees.  

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Brett King
Brett King - Moven - New York | 14 September, 2010, 15:15

James (Javelin),

Agree that prior behaviour can be a predictor of future activity - I think what we are seeing though is that prior behaviour is not staying static. Just because 10 years ago branch was your primary channel, doesn't mean it still is today - brand loyalty or not. That's why mobile, internet and social media are having such disruptive effects today on the total customer approach to banking.

When you look at the psychology behind 'relocation' for example - convenience is a core element to that decision, and when consumers look at the most convenient ways to bank today - branch is not necessarily what comes to mind.

Let's just say - multi-channel behaviour in banking is certainly not going to stand still over the coming years, and as a banker if you expect that the mix in terms of channel activity will stay static, or that you can encourage a return to branch, you're in for a shock.

Brett King, Author - BANK 2.0

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