All industries face disruption. Financial services – specifically the banking industry – has experienced and continues to experience its fair share of shifts and changes that diverge from the traditional ways of doing things due to innovation and new technologies. From mobile investing apps to banking completely online to cryptocurrency, consumers have access to a wide array of diverse options when it comes to managing their finances.
In today's world where hyper-personalization is a must across industries, how can banks and other financial institutions ensure that they offer their customers the right services based on their preferences and needs?
One might be able to take an educated guess, but without reliable and predictive data, banking marketers and data scientists are forced to do just that – guess. However, guessing your customers’ preferences is simply not an option in a quickly evolving space. So, where can banks and financial institutions turn to gain insight into the hearts and minds of consumers?
Predicting the Unknown to Understand Banking Preferences
If you don’t remember the last time you set foot inside a bank, you’re not alone. AnalyticsIQ’s data shows that only 10% of the population is likely to prefer in-branch banking as their primary option. Digital alternatives for handling banking have become more and more popular – and not just with younger generations.
According to The Financial Brand, 71% of individuals in the United States primarily conduct their banking via digital channels like online websites or mobile apps.
With such a high percentage covering the majority of consumers, it is clear that there is a solid mix of Millennials, Gen X, and Baby Boomers opting for digital banking options.
The Digital Banking Consumer
We examined a number of AnalyticsIQ’s proprietary data points, including the likelihood of an individual to prefer various banking styles such as in-branch, online and mobile. The data revealed that the average age of those highly likely to prefer digital banking channels is around 50 years old. That is certainly younger than the 63-year-old traditional banking crowd but not the 20-something tech-wiz you may have envisioned.
For data scientists and marketers in the financial services or banking industry, it is important to recognize that a wide swath of consumers – not just Millennials or younger generations – are seeking out digital services. But that presents a unique challenge all its own. Widespread adoption and similar preferences across age groups makes having reliable and actionable data on your customers all the more important since you cannot rely on generational segmentation and assumptions to personalize your communications and offers.
So, what more can we learn about digital-banking consumers?
Both men and women are going digital as 49% of females and 51% of males prefer digital banking. Digital-banking consumers also tend to be more affluent than the average consumer, earning a 12% higher annual income and having approximately 10% more liquid investable assets. Additionally, digital-banking consumers are 13% more likely to be interested in other FinTech products such as digital payments, mobile investing, mobile wallets and cryptocurrency.
Going beyond basic demographics, like age, is key to understanding what people do and why they do it. For banks to make intelligent business decisions and investments regarding locations, apps and digital services, understanding your audience’s preference is vital.
But the power of data doesn’t stop there. By coupling external data sources with first-party customer data, banks and other financial institutions can proactively respond to the needs and wants of their ever-evolving customers – sometimes before their customers even know it.