17/01/2012
By Scott Thompson
Digital banking is set to overtake branch networks as the main way customers interact with their bank by 2015. But the industry is missing a vital new source of revenue as its digital offerings lag behind other sectors.
That’s the key finding of new PwC research, involving over 3,000 customers. It also shows strong demand for new digital banking services with many prepared to pay up to £10 a month for these.
The research reveals that customers are willing to fork out for social media notifications, an electronic wallet for loyalty cards and financial tools provided by banks. In the UK, 65 per cent of respondents said they are willing to pay just over £4 a month for their bank to store loyalty card information and convert accumulated points into cash.
More and more consumers are using online and mobile channels to access financial products. Sixty nine per cent of those surveyed said they currently use the internet to do so. While a lower number of respondents (33 per cent) currently use mobile to purchase such products, mobile banking is expected to follow a similar usage curve to internet banking, with China, India and the United Arab Emirates currently leading its adoption. Somewhat unsurprisingly, Generation Y2 leads the way, with 67 per cent of respondents saying they currently use or are considering using mobile channels for banking.
Stephen Whitehouse, retail and commercial banking partner at PwC, comments: “Despite customers’ appetite for new and innovative digital banking offerings, and the fact they are willing to pay for these, the majority of banks still only provide basic mobile and internet banking services. Banks are clearly missing a trick if they don’t start to invest in their digital offerings and only see digital as a way to reduce costs. They have generally been too slow to embrace the digital innovation customers now expect from other industries, such as retail or travel. This needs to improve if banks are to hold on to their existing customers and attract the next generation, as the quality of a bank’s digital offering will become an increasingly important factor for consumers.”
He adds: “The lack of investment is perhaps even more surprising considering banks are struggling to grow revenues at a time of increased regulation and a difficult economic environment. Digital products are a significant opportunity for banks to grow revenues and serve their customers in a way that they want.”
