One step ahead: How banks can anticipate what customers will want next

Dec 2016

Today's bank customers are generally happy. But for how long? Learn how banks can deliver what customers will want next.

Are US retail banking customers happy with their banks? How do bank CEOs see the future? We know that banking is being impacted by a combination of technology, millennial preferences, and non-traditional disruptors. And while many customers are currently generally happy, sentiment can turn on a dime. Learn how banks can understand changing consumer expectations and stay one step ahead.

In our 2015 Consumer Banking Survey, we asked a representative sample of US consumers about what they want and expect from their primary financial institution. In very broad terms, consumers appear to be pretty happy with what they're getting today. And this is the very paradox of disruption: the more you satisfy your current customers, the more likely you are to miss the very thing that will rock your industry.

In this paper, we examine how consumers feel about their banks today, what bank CEOs see for the road ahead, and how banks that focus too much on the present may thwart their future success. We agree with most of the bank executives that the financial services industry could look very different by 2020. However, it's too easy to say that banks must disrupt themselves or become irrelevant. The message is clear: banks are under pressure from non-standard competitors, and consumers are willing to listen to these competitors.

As shown below, the vast majority of people we asked considered the following features to be important or very important: responsive customer service (86%), competitive pricing (86%), convenient branch locations (81%), online banking offerings (77%), and convenient branch hours (77%).

Banks need to look a step ahead, and know that consumers can be shaped by their experiences with companies in other industries. When people check into a flight using their phone, or get context-sensitive shopping hints ("if you like this, you may like that"), they may start to wonder why banks can't also provide them the same seamless, on-demand, interactions for a wider set of banking services. So, when far fewer express satisfaction with their financial institution's customised product offers (58%), mobile offerings (57%), or reward programs (44%), it's a red flag as shown below. The fact is, consumers have seen it done better outside the financial services industry.

There's no doubt that banks have to make choices now to shape the way they'll perform in a very different future. We see macro trends that will soon affect what gets sold, and to whom. They'll also affect how services will be delivered, and where.

In each case, banks will succeed by acknowledging the different constituencies they serve, and by developing a plan for each based on behaviours and preferences.

Some banks may choose to bet it all on a digital future. Others may carve out a niche that emphasises service over everything else. Still others are likely to build partnerships with disruptors as part of a model focused on cooperation. There are many ways to play, but they all require change and the knowledge necessary to stay one step ahead of consumer expectations. Banks that act now will be among the winners.