– by Ajay Gupta and Vik Sohoni
Intuitively, we all know that there is a lot more of searching online and mobile that is occurring, whereas previously consumers would more likely walk into a nearby branch. But how prevalent is this, and how much could it drive the seismic shifts that are underway in the banking landscape?
To help answer this question, we recently reviewed the results of the latest round of consumer research we conduct annually among 3,000 banking and investment product consumers across the US (McKinsey & Company has been conducting this survey since 2009). We were particularly interested in understanding how consumers are looking for banking and investment products.
We found three clear trends:
First, more consumers are researching financial products across more channels than were doing so a couple of years ago. This is likely due to the improving economy, record low interest rates, greater trust in banks (that we track in a separate customer survey), and the growth in revolving consumer debt (up 5%). Searches for checking, savings, mortgages, and investments grew by between 5 and 10 percentage points for every segment of the population and in every channel (e.g., website, branch, call center, intermediary, TV etc.). Overall, between 22% to 34% of consumers have looked for a banking or investment product over the past two years.
Second, over 50% of consumers are doing their research using digital channels. When researching checking accounts for example, 53% used a website, 45% of consumers used the branch, 31% relied on word-of-mouth, 29% used price comparison sites, 27% used the call center, and 23% used a social network. For investments, 36% used the brokerage or bank’s website, 30% used a price comparison site or search engine, 29% used word-of-mouth, 28% talked to a broker and 25% visited a branch.
This trend varies a bit by age group. As expected, older consumers tend to rely on bank branches more than their younger cohorts. In researching checking accounts, 42% of young [age 18-34] consumers used branches as a source of information versus 61% for older consumers [age 55+]. However, significant numbers of old consumers are also using digital channels, which is becoming a mainstream activity across all age groups. Some 55% of young consumers and 45% for older consumers used websites as a source of information. In addition, 32% of younger consumers and 17% of older consumers used price comparison websites and search engines.
Clearly, digital channels are dominating the top of the funnel.
Third, it’s clear that bank branches are still popular and won’t go away anytime soon despite signs that customers are turning to other channels. While 46% of consumers thought it was a waste of time to visit a branch (up from 42% in 2014) and 60% do most of their banking via remote channels (up from 52%), a massive 79% say they need a branch close by in case they want to talk to someone (a number that has remained stable since 2014). In addition, 67% say that having a good network of branches was important to them in selecting their bank. This data indicates that consumers aren’t trading one channel for another. They are just becoming more intensely multi-channel over time and interacting more frequently in aggregate.
Consumers are already voting with their browser. Banks will do well to recognize this as a new basis of competition, and determine what the “perfect marriage” of online and in-branch is for their customers.
Ajay Gupta is a senior expert in McKinsey’s Atlanta office and Vik Sohoni is a senior partner in the Chicago office.