Banks Sit On Sideline As Tablet Growth Continues

According to PEW Research Center, tablet adoption has almost doubled over the past year and for the first time, a third (34%) of American adults currently own a tablet computing device, including almost half (49%) of those in their late thirties and early forties and a majority (56%) of those in higher income households.

With this platform becoming increasingly important to customers, banks and credit unions can no longer sit on the sidelines and watch as the digital landscape develops around them. Unfortunately, with limited resources, new research indicates that development of native tablet apps has occurred at a snails pace due to limited resources and a focus on developing new smartphone applications.

In a just released report from Celent entitled, Tablet Banking: An Evaluation of Tablet Apps at the Top 13 Banks, it was found that only seven of the top thirteen US Banks have a live iOS tablet app, and only two of the top banks have a native Android app. In many cases, banks are using their online banking platform as the foundation for tablet users or are making adjustments to their web portals for tablet use.

“Consumers are rapidly growing more accustomed to interacting with their financial institution through devices other than PCs,” says Jacob Jegher, Research Director with Celent’s Banking Group and co-author of the report. “Celent believes that tablet banking represents a tremendous opportunity. However, banks aren’t exactly scrambling to release tablet specific apps.”

Unfortunately, the lack of commitment to the tablet user is not a new phenomenon. In May of 2011, I covered this problem in a post entitled, Banks Slow to Embrace Potential of Tablet Computing. 

Tablets Require Special Attention

As part of the Celent study, it was found that many banks remain unclear as to how the channel should be classified. Is the tablet platform an offshoot of online banking? Is the platform better supported by the mobile banking team? In reality, tablets are a unique platform that deserve individualized attention. According to Stephen Greer, Analyst for Celent and co-author of the report, "Tablets take the best of the PC and the best of mobile and combine them into a device that offers functionality, portability and a rich user experience."

Use cases also need to be taken into consideration when working with multiple platforms according to Greer. "Online banking is functional, complex, and a daytime/work activity, while mobile is quick, contextual and on-the-go. Tablets, in contrast, are often leisure devices, catering to casual couch browsing and intermittent time killing." In addition, since many people multi-task with a tablet device (watching TV, etc.), the visual and tactile functionality of the tablet must be leverage to optimize the user experience.

Because of the interactive dynamics of this platform and the large number of device manufacturers and dimensions need to be supported, a larger investment in development and testing is required. In addition, to date, many organizations have had difficulty measuring the incremental financial impact of this investment. This may be the reason supporting this platform has been so slow.

Evolution of Tablet Banking

While the primary emphasis of the Celent report was a very thorough review of each of the top 13 US banks' tablet application(s) with detailed visual support and commentary on each bank's execution, there was also a review of key trends in the tablet banking marketplace. These trends were reinforced by other research done by Mapa Research in March and Fiserv in a report last month.

• Interactive dashboards that leverage the tactile benefits of the tablet
• PFM tools that add value through unique visualizations of financial insights
• Social media integration beyond customer support and promotion
• Unification of devices to provide common looks for basic functions
• Easily accessible insight such as balances, ATM/branch locations, etc.
• Focus on simplicity using photo capability for account opening, mobile deposit and bill pay
• Speech recognition to minimize keystrokes and improve user experience
• Enhanced security potentially leveraging biometrics

Similar to the excellent analysis Celent has done for mobile banking, they believe that tablet banking is in an ever-changing evolution of functionality and applications. As with mobile banking, each bank is in a different stage within this evolutionary process, with a goal to move to even smarter tablet banking capabilities as shown below.

Tablet Banking Evaluation

As mentioned, in the Celent evaluation of the top 13 banks in the US, only seven currently have iPad apps and only 2 have Android apps. This is obviously a surprisingly low number for banks that should be setting the pace for the industry. Most of the banks evaluated are working feverishly to innovate on their smartphone platforms which has impacted the ability to focus on tablets at all, while others have only updated their initial tablet application one or two times.

Celent found that most of the tablet applications evaluated were 'transaction enablers' as opposed to leveraging the visualization and tactile nature of the tablet platform. Of special interest would be the inclusion of more PFM applications since Raddon Research found that tablet owners (27 percent) are found to be twice as likely to use PFM tools than non-tablet owners (12 percent).

While the scoring, final rankings, screen shot evaluations and final 'Xcelent' awards for the top 13 US banks can only be shared with subscribers to Celent research, a less robust ranking of iPad banking applications is available by viewing the top 200 apps in the iTunes store. 

In 2011, only 7 banks were ranked in the top 200 iPad apps in the finance category. The good news is that Bank of America, Chase and Wells Fargo are now the top 3 downloaded free iPad finance apps on iTunes according to padgadget.com, with Citibank (13), U.S. Bank (19) and PNC (22) ranking in the top 25 (28 banks are in the top 200). The bad news is that most of the largest banks are not rated very highly by users (First National Bank of Omaha (5) and Peoples United Bank (8) are the highest ranked iPad finance apps according to Padgadget.com here).

Some Tablet Innovations

Mapa Research reviewed innovative tablet uses globally in March, 2013 and shared many of these unique apps in their study entitled, Tablet Banking Series: Branch on the Go?. Below are some of the more interesting screen shots that caught my attention. The 75 page report has over 50 screen shots covering many different tablet applications as well as outlining a blueprint for success from their perspective.

Citibank: Integration of Check Visuals for Tablet Application

Amex: Upon first sign-in, all features of app are highlighted

KBC Bank: Social media integration includes sharing of savings goals

Raiffeisen Bank: Direct access to applicable advisor

The key findings of the Mapa research included:

• Innovative features and services focus on providing both convenience and a smooth user experience for both transactions and browsing, creating the tablet almost as a “on the go branch”. This is highlighted by the incorporation of access to advisors and features which aim to increase banks revenue.
• Personalization and PFM go hand-in-hand. While not all users utilize the PFM feature, it is essential that incorporating this service incorporates a high level of customization. Furthermore, the ability to customize even basic features such as the color and layout enhance the customer journey.
• While there are mixed findings on the eradication of Apple’s market share for tablet device by Android and Kindle tablets, the iPad should be the device of priority for innovation due to demographics of user and web usage volume.

The Future of Tablet Banking

It is clear that digital channels are no longer 'alternative' channels. In fact, they are the fastest growing financial channels in the history of banking and are supporting an ever changing consumer who is more connected than ever. As more tablets are purchased and the capabilities of the devices expand, banks and credit unions must evolve to meet customer expectations. This will require a clear, focused and integrated strategy for tablet banking as well as for all digital channels.

Institutions of all sizes can't continue to sit on the sidelines, providing vastly underdeveloped tablet applications or 'canned' solutions. While it can be expected that mid-sized and smaller institutions will lag their larger counterparts in this development process, monitoring best in breed in the US and overseas is one of the keys to success. This evaluation of what is possible should be done by product managers, marketers, as well as other senior executives in the organization to set the foundation for future strategies and development.

Note: The Celent research on the tablet banking applications at the top 13 banks in the US is a report that complements a similar series of evaluations done by Celent on mobile banking. Analysis of this report Celent was done by Bank Marketing Strategy in August 2013 entitled, Today's Mobile Banking Apps: Table Stakes or Cutting Edge.

Additional Resources

Tablet Banking: An Evaluation of Tablet Apps at the Top 13 Banks - Celent (September 2013)

Tablet Ownership 2013 - Pew Research Center (June 2013)

Banking on the Tablet Channel - Fiserv (August 2013)

Portrait of Today's Tablet User - Wave II - Frank N. Magid Associates (June 2013)

Tablet Banking Series: Branch on the Go? - Mapa Research (March 2013)

User Insights Volume Two: Comparing the Desktop and Tablet Banking Experience - Corporate Insight (August 2013)

iPad Apps Tracker: Top 200 For Finance (Free) - Padgadget.com (updated several times a day)

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Rethinking the Multichannel Banking Experience

In response to customer demands, banks continue to invest in increased multichannel functionality and set a goal of delivering a consistent customer experience across all channels. The result is an environment where consumers have little incentive to choose one channel over another and where banks have are faced with increasing complexity and costs.

A better solution may be for banks and credit unions to limit the functionality of all channels and to instead simplify the process of moving a customer from their preferred channel to the 'best' channel for different needs, thereby improving the overall customer experience.

As I visit banks across the country, the majority are seeking to stem attrition and maintain customer satisfaction by providing consistent, integrated services across all channels and encouraging customers to self-select channels according to personal preference. In fact, nearly two-thirds of executives interviewed by CEB TowerGroup agreed that delivering a functionally consistent customer experience across all channels was a priority.

With over 60 percent of multichannel experience customers reporting that both web and branch service offerings were consistent, it seems early efforts are paying off. However, this accomplishment has come at a price: trying to develop an 'omnichannel' experience is causing customer preferences to converge and overall transactions to increase, further increasing the complexity of channel maintenance, resulting in higher costs and amplified risks without the customer experience benefits desired.

Growing revenue, reducing costs, and improving customer loyalty demands that retail bank executives consider a more strategic and nuanced approach to multichannel development according to recent research from CEB TowerGroup, entitled "Rethinking Multichannel Strategy: Improve the Customer Experience Through Channel Differentiation and Proactive Guidance'. The research recommends three steps that bank and credit union executives should take to improve their multichannel strategy:

1. Differentiate channel functionality
2. Proactively guide consumer's choice of channels
3. Formalize the process of evaluating channel performance

The Omnichannel Dilemma

Consumer interest in online and mobile banking has gone unabated for several years now, with digital channel use increasing significantly. As consumers manage their finances in the context of new technology such as smartphones and tablets in conjunction with online banking, branch and ATMs expectations have also increased, requiring banks to provide custom applications and improved service through all channels.

Unfortunately, the increased volume of digital transactions has not resulted in comparable reductions in use of traditional channels or the promised cost savings. Instead, banks and credit unions are adding layers of complexity and costs while trying to maintain a high level of customer service.

Source: CEB TowerGroup

Interestingly, according to the research from CEB TowerGroup, while the transaction volumes continue to increase for digital channels, consumers still say they prefer a human touch to their banking which could lead to an even distribution of channel use, making it difficult to please everyone. In addition, as financial organizations monitor customer preferences, consumers tend to 'want it all' since there is little financial incentive to differentiate what they 'want' from they 'need'.

Providing more choice and total functionality across channels increases both cost and complexity as shown below.

Despite functionally consistent offerings across channels, the CEB TowerGroup research also found that technology-focused customers gave lower marks for communication and service, indicating possible confusion on the part of the customer due to this underlying complexity.

Differentiating Channel Functionality

Instead of trying to make all channels consistent in their capabilities and functionality, CEB TowerGroup recommends building a differentiated functionality for each channel that is consistent with the customer experience strength of the channel. This is required as an interim step towards a process that helps guide the consumer to the best channel for any interaction with the institution as shown below.

Differentiating the channels requires assessing the customer's channel preferences and aligning these preferences against the best capabilities of a channel, the incremental costs to deliver, usage patterns and the potential for a positive customer experience.

Contrary to what many bankers may think, customers don’t demand a wide range of choice of channel according to the research. Rather, customers are often confused by the increased choice and prefer whichever channel requires the least amount of effort. In other words, customers who demand the ability to do any banking function in the channel of their choice are in the minority.

According to Nicole Surgill, research director of retail banking at CEB TowerGroup, "You have to define what the customer cares about and realize that isn’t the same as what we care about. 'I want to deposit a check when I want' or 'I want to get a loan for a house when I want' or 'what is the easiest and most understandable way for me to do that?'"

Implementing a new, simpler process for the customer doesn’t always equate to cost savings for the bank. But we still need to make this experience better or the process better. The challenge is defining what makes the customer experience better and then tying it to reducing attrition and increasing the customer’s willingness to buy more.

Internal capabilities and development costs of different channels are invisible to the customer, so banks and credit unions should determine best-fit channel functionality for each customer need. By simplifying service offerings and tailoring each channel to serve specific customer needs, organizations can limit and specialize channel functionality, reducing costs and complexity and improving the overall customer experience.

We also need consistency in the channels where customers are most likely to CROSS channels. For example, Sturgill emphasizes, "Opening a new account or seeking advice on a product or service or trying to resolve a problem – that’s where a customer may start in one channel and finish in another. We need to focus on where customers will cross channels and simplify the transition from those channels, instead of focusing on doing it all in every channel."

Proactively Guiding Choice of Channels

As stated above, customers don’t demand choice of channel. Rather than encouraging customers to select the channel of their choice, the CEB TowerGroup research recommends that retail banks should proactively guide customers to the channel(s) that will enable them to accomplish each task with minimum effort. Done well, the process will guide the customer to the lowest effort channel while still satisfying the customer's desire for choice.

However, there are two main obstacles to effective guidance – the first is a lack of experience with non-branch channels. This prevents many customers from choosing the best-fit channel for their needs. Secondly, when customers have chosen a channel, they are reluctant to switch even if another channel promises easier resolution. In other words, old habits may be hard to break.

In order to overcome these obstacles, banks should identify common service triggers and step in at these points to preemptively guide customers to the best-fit channel. The goal is to provide a better path for the customer to follow and to avoid customer disengagement as they are served through different, more effective and efficient channels.

One of the most effective ways to preempt channel use that is not best for the customer (or the bank) is through either an immediate event-based email or an SMS message that provides links to the appropriate channel. During this communication, FAQs are very effective at proactively answering the potential questions a customer may have.

Evaluate Channel Performance

Following the first two steps of channel differentiation and customer guidance, banks and credit unions should create a formalized process to evaluate the results. To motivate channel migration, institutions could employ branch interactions to drive selection of online channels, proactively guiding the customer to the best fit channel. An exit survey would then be a good assessment of customer satisfaction with new channel experiences.

The purpose of this measurement process is to continually reassess and improve channel functionality that will lead to reduced costs and duplication of efforts as well as a better customer experience. This will also reduce process abandonment which is one of the 'silent killers' of new account opening, cross-sell, increased engagement and retention.

Overall, the goal is to create a multichannel experience that optimizes both the efficiency and effectiveness of each individual channel or group of channels for any specific purpose as opposed to trying to be all things to all people. This reduces redundancy and improves the ability for each bank and credit union to provide the level of service desired by the customer at any touchpoint.

A discussion with Nicole Sturgill, Research Director, Retail Banking at CEB TowerGroup on improving the customer experience in a multichannel banking environment. 

Additional Resources

Rethinking Multichannel Strategy: Improve the Customer Experience Through Channel Differentiation and Proactive Guidance - CEB TowerGroup (April 2013)

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