Getting Real With Virtual Banks. A Brave New World for Customers or Just More Impersonal Experiences?


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Having earlier this year taken a look at the current reality, and possible customer experience future, of virtual banking, I’ve continued to monitor trends in this industry. There have been several major space-age changes taking place in just the past several months, and they are well worth passing along because the new developments have customer experience ramifications for other industries.

In the U.S., the trend toward closing local branches began with national banks, and it has spread to the regional bank networks. Because of cost issues, and what some banks perceive as the public’s growing dislike for the time, effort, and lack of privacy associated with branches, the movement toward virtual banking has continued to accelerate. In the U.K, for example, the Bank of England recently licensed Atom Bank, which identifies itself as a branch-free, paper-free, and stress-free bank. Every banking service Atom offers is available via smartphone, making a digital experience for customers that represents a “bank in their pocket that is ready whenever and wherever they need it.”

Atom was founded by Anthony Thomson, former Chairman of Metro Bank in London, so there is a going-in understanding of banking customer service needs. A focus on app friendliness and transactional security are two of their main precepts. To support their array of virtual bank services, Atom is building a team to provide phone, chat, and online support when customers need them. Customers will also have international access to ATMs; and, when required, checks will be available.

Meanwhile, in the U.S., we’re seeing banking industry success i companies like Moven and Simple, digital services which provide detailed, categorized personal finance tracking, with features like funds transfer by smartphone. Add to that, LendingClub, Mint, Kickstarter, and Wealthfront, and it becomes apparent how these online services are bringing digital innovation, to loans, financial management, crowd-funding, and investment services.

Lest it begin to feel that virtual banking, driven by new digital technology, has past the tipping point and is now taking over, recent ethnographic and quantitative financial consumer studies prove otherwise. Even Gen X and Gen Y customers, though liking the convenience of digital, still want a person-to-person relationship with their bank. In other words, there continues to be a desire to “belong’ to a banking entity.

This last fact was a key finding in a 2014 study by Bain & Company. Their survey, which covered over 80,000 consumers in 22 companies, determined that about two-thirds of consumers want, and use, a combination of digital and physical elements in their banking activities. Multichannel banking is the consumers’ preference. They want human interaction, people they can speak with on a one-to-one basis. This is especially true when they have complex transactions, have complaints or problems, or need professional advice. For banks, the key issue is figuring out the level of resources to invest in their branch networks and how much to invest in digital, smartphone-based services.

So, will virtual banks like Atom, Moven and Simple be the future, or will they become like the Segway which, as one American Banker writer noted, has “quietly settled into a comfortable niche between golf carts and pogo sticks.” If the latter, then, to quote the same writer, it may “end up in a nice little niche, next to the next big thing that never was.”


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