What Bankers Can Learn From The Retail Industry

by Edward O'Brien 0

Hand of woman paying with contactless credit card with NFC technology, finance concept

The digital challenges and opportunities facing banks and credit unions are not unlike those faced by retailers more than a decade ago. Will the banking industry learn from those before them or face a similar fate similar to Blockbuster, Borders, Circuit City and others.

An IBM report showed the distinct and complementary way consumers use their digital devices for retail spending. Smartphones drove 31% of total online traffic, nearly two and a half times that of tablets. While smartphones drove the traffic, more purchases were completed on tablets. Tablet sales accounted for 13% of total online sales, whereas smartphones only accounted for 9%.

This consumer behavior is called multi-screening. There are two primary types of multi-screening behavior: sequential screening, where consumers move between devices, and simultaneous screening, where multiple devices are used at the same time. Because the use of multiple screens makes the digital consumer feel more efficient, it is a behavior that is likely to increase as the universe of digital devices grows.

Omnichannel, a word making regular appearances at FinTech conferences and in the financial services industry media, originated in the retail industry. For retailers, it describes a strategy for leveraging the purchase cycle by providing shoppers with a consistent, intuitive user experience across the various digital devices they use when they purchase goods and services online or in a physical store. Some retailers are very good at this. Some are not.

Financial institutions now find themselves faced with the same challenges as retailers: the customers and members they serve expect to use all of their digital devices to address their financial needs. And, just as they do when they shop, consumers are moving between devices when they do their banking.

The transition from omnichannel retailing to multichannel banking to omnichannel banking, as well as the movement toward a broader digital experience has also been well-documented in recent Mercator Advisory Group Banking Channels research. An increasing number of financial institutions are learning from retailers, and focusing their customer experience efforts around the needs of consumers, and not just banking customers. This evolution (if not revolution) is ramping up quickly, and expected to continue to accelerate over the next few years.

Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group

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