This article originally appeared on Forbes.com.
It could be a game show bonus question: Who is more likely to call his bank contact center, a plugged-in millennial in Brooklyn or a retiree fresh off the tennis court at The Villages in Florida?
Surprisingly, that young, bearded, plaid-shirted hipster is placing calls to his bank at 1.7 times the rate of the 70-something slice-meister. Millennials may be fluent in Siri, but they are still on the learning curve for paying bills, depositing checks, transferring money and generally resolving issues with their accounts. They also visit the bank branch fairly frequently―and not for free coffee.
Can this really be happening today? After all, retail banks have been trying to automate consumer transactions since the introduction of the ATM in 1967. Their motive is obvious: Each mobile interaction incurs a variable cost of about 10 cents, compared with $4 for a teller or call-agent interaction. Yet despite the increasing power and presence of mobile devices, US banks have a long way to go to realize the promise of digital self-service. For example, nearly 90% of the 5,300 US consumers recently surveyed by Bain & Company, in partnership with Research Now, visited a teller during the previous quarter, and nearly half called their bank.
Consider the $11.4 billion that the 25 largest US banks could save each year, if they reached the level of mobile and online banking usage of their counterparts in the Netherlands. Dutch banks began to reconfigure their branch networks a decade ago, as the country’s strong broadband infrastructure and shift to cashless commerce allowed consumers to adopt mobile banking early on. When interactions migrate to mobile, a bank needs fewer tellers and call-center agents. So the largest US banks would save $11.4 billion annually in aggregate if customers’ branch and call center usage declined to the Dutch level, and the banks reduced headcount accordingly.
When we analyzed the US survey data, we found some surprising dynamics. Younger customers, while heavy mobile users, report that they find digital channels confusing or inadequate for their banking, and often need help. Among the heaviest teller users, for instance, 42% of the younger ones tried using another channel before visiting the branch.
Moreover, respondents age 18-24 make twice the number of banking interactions on average as respondents 65 and older. The large volumes from younger customers flow through numerous channels, raising costs for the bank and frustration for the customers.
Ripe for mobile conversion
As if dealing with that flood of calls and teller visits wasn’t challenging enough for banks, consider another overlooked opportunity: migrating older customers from the branch to mobile. Older customers are far less likely to use banking mobile apps or websites, with only 31% trying those digital channels, compared with 82% of millennials.
What causes such demographic disparities? One convenient narrative, that seniors resist new technology, does not appear to apply. When older customers do use a bank mobile app, they generally like the experience, giving it a slightly higher Net Promoter Score (a key metric of customer loyalty) than younger customers do. And older users have more banking interactions online through their computers than younger customers.
Senior customers thus appear to be ripe for mobile conversion. They’re willing to learn new technology if banks provide them with the right help and support to do so. After all, consider how many seniors patronize Apple’s in-store Genius Bar.
To overcome the barriers, survey evidence suggests that banks should look within to their unconscious ageism. Only 17% of older respondents say they have received any guidance or training on how to use their bank’s mobile app, compared with 26% of young respondents. Whether some banks assume older customers are not interested, or have decided that creating an effective guidance process is too much trouble or a low priority, these banks are missing a major opportunity to shift transaction volume to lower-cost mobile channels among the people who value it the most.
Consumers’ responses suggest that banks would benefit by creating different tracks for guidance and incentives to change consumer habits: Teach the young to bank, and the old to self-bank. As banks reconsider their tactics, they will want to devise interventions by frontline branch and call agents that blend education and encouragement: For example, not “why don’t you use your phone?” but “would you like to see how you could save time?”
Some retail banks have been reaching out to consumers more than others. Respondents report that Citi, Capital One, Regions and USAA all give more guidance on mobile channels than other banks. Yet digital channels often are not as effective as banks would like; customers try them, but contend with various problems and wind up visiting a teller or calling a contact center anyway. When customers fail in their attempts to transact digitally, more than one-third cite technical problems or lack of functionality. For attempts at ATMs, long lines and technical problems were major issues.
Tackling all the barriers to digital adoption might seem daunting, but an integrated program to spur behavior change among consumers can yield quick results.
We have found that using Agile techniques to tackle the root causes of routine branch visits and phone calls is quite effective. Typically, a team consisting of frontline employees from all the relevant functions identify any barrier to adoption of self-service technologies, and introduce rapid tests of solutions to overcome the barriers, whether through changes in policy, process, training, communications or technology.
Banks taking this approach have been able to reduce branch and call center volumes by 20% in 12 months. For a typical US bank with 1,000 branches, the potential savings could reach $70 million to $80 million within a year. And banks that design an easy, accessible and convenient self-service experience stand a better chance of delighting customers in the process, whether they’re web designers in Brooklyn or retired nurses in Florida.
Maureen Burns, Gerard du Toit and Mark Schofield are partners in Bain & Company’s Financial Services practice.