A study to be released Friday (Dec. 19) shows that mobile interactions are soaring, but that’s not entirely a good thing. The report, from Bain & Co., also shows that digital-only customers are less loyal, less engaged and purchase fewer products. Looks like those branches and tellers are more critical than was originally thought. In short, lower-cost mobile interactions are also lower-profit.
To be fair, some of this is pre-ordained; the services offered by mobile apps - such as checking balances and making deposits—are low-profit activities. The premise has always been to offload necessary but time-consuming and not-especially-profitable tasks away from bank employees (both in-branch and in call centers), thereby allowing for fewer employees and, in theory, even higher profits.
The report, as described in The Wall Street Journal, doesn’t break down how many “digital-only” customers exist and whether their numbers have increased. Even if it’s for nothing more than hitting an ATM to get cash, most active bank customers eventually have to go beyond smartphone or laptop/desktop interactions.
But the report did show that, for the first time, “U.S. customers interacted with their banks more through mobile devices than any other means” and that “mobile interactions are now 35 percent of the total, more than any other type, including traditional online channels, automated-teller machines and branch visits,” the story noted.
At J.P. Morgan Chase, for example, 18 million mobile users have logged on within 90 days, up 23 percent from November 2013.
The key here is sales opportunities. Bank representatives constantly use interactions to pitch new products and services, which is where profits lie. An ultra-rapid and efficient mobile interaction doesn’t do that nearly as well or as often. A mobile or desktop house ad is far easier to ignore than a teller or telephone banker making a pitch. The story cited stats from Wells Fargo that “high-intensity customers—those who frequently interact with the bank across multiple channels—tend to be 1.7 times more profitable, and typically own six more products, than low-intensity customers.”