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Changing Channel Preferences in Retail Banking - UK - October 2016

Published By :

Mintel

Published Date : Oct 2016

Category :

Banking

No. of Pages : N/A

Consumers have made an irreversible switch from traditional banking channels to digital banking. People not only use online banking more than branches, but see it as the preferential choice for everyday banking and are more satisfied with it than any other channel. The challenge for banks is how to prevent the shift online weakening customer relationships and undermining customer loyalty. This will become even more pressing as Open Banking looms on the horizon.

Table of Contents

OVERVIEW
What you need to know

EXECUTIVE SUMMARY
The market
Current account holders have moved online…
Figure 1: Number of customer instructions by telephone and computer (millions) at high street banks
…and new regulations offer further opportunities for development
Companies and brands
All major banks have closed branches and invested in digital services
Challengers look to digital opportunities, but Metro Bank bucks the trend
The consumer
Current account holders more likely to use online banking than branches
Figure 2: Use of different retail banking channels, July 2016
Digital channels are the go-to choice for managing accounts
Figure 3: Retail banking channels used to complete various activities, July 2016
Branches still hold some appeal
Figure 4: Preferred retail banking channels to complete various activities, July 2016
Consumers are most satisfied with online banking
Figure 5: Satisfaction with retail banking channels, July 2016
Consumers tend to be cautious about new features
Figure 6: Attitudes towards using new online digital features, July 2016
Consumers are most likely to respond to letters from their bank
Figure 7: Favoured methods of contact by banks, July 2016
Branch closures weaken customer relationships
Figure 8: Attitudes towards changing retail banking channels, July 2016
Convenience has made the online revolution a success
Figure 9: Attitudes towards changing retail banking channels, July 2016
What we think

ISSUES AND INSIGHTS
Consumers have forgiven security concerns to reap the benefits of online banking
The facts
The implications
Branches still have a place in modern banking
The facts
The implications
Early adopters have significant influence over future innovation
The facts
The implications

THE MARKET – WHAT YOU NEED TO KNOW
Current account holders have moved online…
and new regulations offer further opportunities for development

MARKET DRIVERS
More people are registered for, and use online banking than telephone banking
Figure 10: Number of personal customers registered to access their accounts by telephone and computer (millions) at high street banks
Figure 11: Number of customer instructions by telephone and computer (millions) at high street banks
Access to Banking Protocol
PSD2 and open APIs to offer new ways to manage accounts

COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
All major banks have closed branches and invested in digital services
Challengers look to digital opportunities, but Metro Bank bucks the trend

COMPANY PROFILES
Barclays
HSBC
Lloyds Banking Group
RBS Group
Santander
Nationwide

LAUNCH ACTIVITY AND INNOVATION
Online-only banks come to market
Metro Bank uses ‘stores’ to fuel growth

THE CONSUMER – WHAT YOU NEED TO KNOW
Current account holders more likely to use online banking than branches
Digital channels are the go-to choice for managing accounts
Branches still hold some appeal
Consumers are most satisfied with online banking
Consumers tend to be cautious about new features
Consumers are most likely to respond to letters from their bank
Branch closures weaken customer relationships
Convenience has made the online revolution a success

BANKING CHANNELS – FREQUENCY OF USE
Branches: Highly valued, seldom used
Figure 12: Use of different retail banking channels, July 2016
Younger consumers are most likely to ask for in-branch help…
Figure 13: Use of “In-branch advice services (eg for more detailed queries and product advice)” at least once a month, July 2016
and to use mobile apps
Figure 14: Use of “Mobile banking (including smartphone/tablet apps)” at least once a month, July 2016

CHOICE OF BANKING CHANNELS
Digital channels are the go-to choice for managing accounts…
Figure 15: Retail banking channels used to complete various activities, July 2016
and for making new applications
Branches are the top choice to find help and to complain
Most consumers stick to one channel
Figure 16: Retail banking channels used to complete various activities, repertoire, July 2016

BANKING CHANNEL PREFERENCES
Consumers still appreciate the value of branches
Figure 17: Preferred retail banking channels to complete various activities, July 2016
Little demand for mobile banking expansion
Telephone banking: The worst of all worlds

SATISFACTION WITH CHANNELS
Online banking achieves the highest levels of satisfaction…
Figure 18: Satisfaction with retail banking channels, July 2016
but few service users are dissatisfied with anything
Nationwide and Santander customers are most satisfied with their branches…
Figure 19: Satisfaction with in-branch counter services (eg paying and withdrawing money), by main current account provider, July 2016
Figure 20: Satisfaction with in-branch advice services (eg for more detailed queries and product advice), by main current account provider, July 2016
while Barclays and NatWest lead the way in apps
Figure 21: Satisfaction with mobile banking (including smartphone/tablet apps), by main current account provider, July 2016

ATTITUDES TOWARDS NEW CHANNELS
Consumers tend to be cautious about new features
Figure 22: Attitudes towards using new online digital features, July 2016
Millennials are the most likely to be early adopters
Figure 23: Attitudes towards using new digital banking features, by generation, July 2016

ATTITUDES TOWARDS CUSTOMER ENGAGEMENT
Consumers are most likely to respond to letters from their bank
Figure 24: Favoured methods of contact by banks, July 2016
Emails are a popular choice, but are open to fraud
Non-online banking customers would rather visit a branch
Figure 25: Customers’ favoured methods of contact by banks about a matter regarding their account, by use of online banking, July 2016

ATTITUDES TOWARDS BRANCH CLOSURES
55% think branch closures negatively impact banking relationships
Figure 26: Attitudes towards changing retail banking channels, July 2016
Call centres aren’t a sufficient replacement
HSBC and Barclays customers most likely to have lost their local branch
Figure 27: Agreement with the statement “My local branch has closed in the last 5 years”, by main current account provider, July 2016

ATTITUDES TOWARDS CHANGING CHANNELS
The importance of convenience
Figure 28: Attitudes towards changing retail banking channels, July 2016
The digital revolution has been positive, and more is to come
New features could cause account switches

APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology

List of Table

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