NEW YORK--(BUSINESS WIRE)--Simon-Kucher & Partners, a global strategy and marketing consulting firm today released results from its survey, Branch vs Digital Banking Behaviors Reshaped by COVID-19 Lockdowns. The survey examines the coronavirus pandemic’s impact on customer preferences in account opening, bank switching and primary banking relationships.
“Branch traffic declined sharply in the immediate aftermath of COVID-19, a behavior that will likely stick to some extent until we have mass vaccinations,” said Wei Ke, Ph.D., managing partner at Simon-Kucher & Partners. “Banks are at an important crossroad as the bank branch has historically played a critical role in customer acquisitions, brand building and customer relationships.”
In the survey, 42% of respondents said they will reduce branch visits after the lockdowns end. However, the survey also found that when it comes to decisions about who-to-bank-with, the physical bank branch will continue to play a pivotal role. Meanwhile, the retail bank customer will be willing to travel greater distances to a branch, suggesting an opportunity to reduce branch density; and rising expectations for best-in-class digital capabilities will create new pressure for banks.
Banks must begin to build a resilient, agile bank distribution and servicing model to ensure the effects of social distancing, evolving banking behaviors and a lingering pandemic do not inhibit their ability to grow deposits, service customers and expand wallet share over the next 18-24 months.
Highlights of the survey include:
Bank Branches will Continue to Play a Pivotal Role
- When considering where to open an account after the lockdown, a majority (54%) of respondents said they would only consider a bank with physical branches, compared to just 3% who said they would only consider a digital-only bank
- A large number (65%) of respondents said they would move at least some of their business to a new bank if their primary bank’s local branch were to permanently close
- When asked which bank brands come to mind when opening a savings account, most respondents recalled, without being prompted, bank brands with large physical branch presence: JPMorgan Chase (14%), Bank of America (11%) and Wells Fargo (9%)
Customers Prefer to Open Accounts In-Person
- After the lockdown is lifted, a large number of respondents said they would get a mortgage (69%), open a savings account (57%), open a business banking account (53%) or dispute an unexpected fee (39%), in-person versus digitally
Expect Fewer Branch Visits, Willingness to Travel Further
- Older respondents are less likely to reduce branch visits after the lockdown: 52% of respondents between 25-34 said they would reduce branch visits, compared to 49% for respondents aged 35-44, 38% for respondents aged 45-64 and 29% for those older than 65
- Post-lockdown, respondents said they are willing to travel longer distances to their nearest branch provided their bank offered best-in-class digital capabilities. Travel time tolerance increased from a 28-minute walk to a 37-minute walk on average in urban settings; and from a 16-minute drive to a 27-minute drive on average for suburban/rural settings
Customers Raise-the-Bar on Digital Capabilities
- A majority of respondents (51%) said they would never consider opening an account at a bank that did not have best-in-class digital capabilities
- When asked if they are completely satisfied with their primary bank’s digital offerings, only a moderate percentage of respondents agreed at the top 4 national banks (39%), super-regional banks (35%), community banks (33%) and credit unions (36%). Even digital-only banks have room for improvement: only 53% of respondents who banked at a neobank said they were completely satisfied
Simon-Kucher will be hosting a Creating a Resilient Distribution Strategy in Banking webinar inspired by these findings. Contact the firm to sign-up.
Full-survey results are available on request.
About the Survey
The Simon-Kucher & Partners survey was conducted in June 2020 and included 1,071 participants in the United States. Survey results are derived from a good distribution across the population with representation for significant variables including employment, age and marital status.
About Simon-Kucher & Partners
Simon-Kucher & Partners is a global consulting firm specializing in TopLine Power® with a focus on strategy, marketing, pricing, and sales. We help our clients achieve growth and profit targets by applying practical, evidence-based strategies. Simon-Kucher & Partners is regarded as the world’s leading pricing advisor and thought leader. The firm has 1,300 employees in 38 offices worldwide.