Channel Usage – Page 9 – Digital Finance Analytics (DFA) Blog

Mobile banking users to reach 2 billion by 2020

New research from analysts Juniper Research, finds that over 2bn mobile users will have used their devices for banking purposes by the end of 2021, compared to 1.2bn this year globally. Growth in mobile banking is being driven by consumer adoption of banking apps the changing way consumers manage their finances.

The new research, Retail Banking: Digital Transformation & Disruptor Opportunities 2016-2021, found that the number of mobile banking logins are now exceeding that of internet banking logins in many markets. For example, the BBA (British Trade Association for Banking) announced that banking app logins in the UK reached a record 11m per day during 2015, compared to 4.3m internet banking logins during the same period.

Meanwhile, a recent Consumer Survey conducted by Juniper Research found that around 65% of mobile banking customers in the US and the UK uses an app to conduct banking services.Digital Disruption in Banking ~ What Next?

The report found that banks are becoming increasingly concerned that their market position is being undermined by tech-companies and pure-play vendors enabled by technology and regulations to enter the marketplace. For example, in the UK alone 5 new digital banks received licences or launched services so far in 2016, including Starling, Tandem, Atom, N26, and Monzo, with around 20 banks currently in talks with regulators to receive a licence.

Additionally, by 2017, banks in the EU will be compelled to open their APIs. This will result in many innovative new products that analyse (with permission) user data to create more attractive financial services for customers.

“Recent industry shifts highlight why traditional banks must respond rapidly to retain market share by cultivating new revenue channels and enhancing existing base through sustained innovation. However the challenge here for new players is to increase market share and maintain profitability in the long-run”, added research author Nitin Bhas.

The whitepaper, ‘Futureproofing Digital Banking’ is available to download from the Juniper website together with further details of the full research.

Juniper Research is acknowledged as the leading analyst house in the digital commerce and Fintech sector, delivering pioneering research into payments, banking and financial services for more than a decade.

Suncorp closes eight Perth branches

From The West Australian.

Suncorp is all but quitting over-the-counter banking in WA, closing eight of its nine Perth branches.

The Queensland financial services group says the decision reflects the declining use of branches by customers, who are increasingly going online to do their everyday banking.

“The decision to close a branch is never taken lightly, but we’re finding that fewer customers do their banking at the branch,” Suncorp said in a statement.

“Since 2010, national over-the-counter transactions have declined by 30 per cent, from 685,000 to 478,000 in August 2015, while mobile transactions have grown from 312,000 transactions to more than 5 million in July 2015,” it said.

Banks, however, are also intent on cutting expenses in what is a low-growth environment, with Suncorp chief executive Michael Cameron telling shareholders just last month that “recalibrating” the group’s costs was a priority.

WA accounts for about 7 per cent of Suncorp’s $54.3 billion loan book.

Perth customers who prefer face-to-face banking will have to rely on the one branch not slated for closure, in St Georges Terrace.

The group was unable to say how many staff were affected by the closures, adding that it was trying to redeploy them elsewhere within Suncorp.

NAB launches overhauled broker offering

From Australian Broker.

One of Australia’s biggest banks has revealed an overhaul in it broker offering that places a strong emphasis on customer service and reducing channel conflict.

NAB today officially launched its updated broker offering, which now means NAB borrowers introduced through the broker channel will have the same access to NAB services and products as any other customer.

Through the NAB broker platform, brokers now have access to four more home loans; NAB Choice Package, NAB FlexiPlus Mortgage, NAB Tailored Home Loan and NAB Base Variable Rate Home Loan, as well as 10-year interest only periods for investment loans.

Upfront and trail commission is offered on the expanded suite of home loan products, while brokers also have access to a wider range of credit card offerings.

Steve Kane, NAB broker offering general manager, said today’s launch is a significant step for the bank and signifies the final step in an ongoing process to strengthen the connection between it and the broker network.

“We had the Homeside brand that didn’t really resonate and put a hurdle in front of brokers when they were talking to their customers. We made a decision to move to NAB Broker and remove the Homeside brand, but the operation stayed the same,” Kane told Australian Broker.

“This is the final stage of that journey, which is really about using the full power of the NAB brand, all the process and services of NAB and all the channels of NAB to support brokers. This is really as much a statement about launching NAB back into the broker market,” he said.

As well as allowing broker clients access to a wider range of products, Kane said the new NAB Broker offering will have a strong emphasis on customer service, which will hopefully lead to a stronger broker–client relationship.

“The position that brokers are now taking is… more and more a long term relationship, rather than transactional one,” Kane told Australian Broker.

“A significant number of brokers are now looking at the whole lifecycle of the customer and part of this rebrand is talking about the broker as a trusted adviser and we’re talking about broking for life.

“We need to be able to offer a holistic range of products and services to support the brokers in doing that, rather than just a mortgage.”

Kane said a new initiative, where select NAB Branches will have staff dedicated solely to broker introduced customers, will hopefully achieve that goal as well as helping to reduce channel conflict.

Under the initiative, brokers can refer their clients to a NAB branch, where dedicated broker channel staff will ensure their accounts and other facilities are set up properly. Those staff are not on a sales incentive program meaning brokers don’t have to fear losing the client.

“The broker is in charge of the products they want to sell the customer. We’re not trying to say we’ll take it all over. What we’ll be doing is ensuring all their accounts and facilities are set up correctly,” Kane told Australian Broker.

“It’s not about competition between channels; it’s targeted at customer service. But it’s not targeted at customer service to the detriment of the broker channel.

“We will always respect the primacy of the broker-client relationship. If a customer came in and said I want a transaction account, we might set them up for that, but on their file brokers can indicate they have a financial planning business or whatever else we won’t do anything that conflicts with that.”

Revealed – The Top-Ten Digital Suburbs Across Australia

We finish our review of the top digital suburbs across Australia by revealing the top ten post codes with the highest counts of households who are digitally inclined.

This is an interesting list because it consists of a wide spread of household segments, locations and states. This means that counter to the initial idea of a standardised “digital first” approach, effective digital strategy needs to be tailored and targetted to each group. Segmentation is still required.

The truth is that effective digital strategy still requires intimate knoweldge of the target groups. This is something which can be done more easily via digital channels, if the strategy is built correctly. However, many players are yet to harness the potential this offers, and to appreciate the full implications for those with a strong physical geographic footprint.

Read more about “digital first” in our report – The Quiet Revolution.

The Top Digital Suburbs Around Adelaide

As we continue our series on Australia’s top digital suburbs, today we look at SA, and the region around Adelaide. The top postcode is 5159, which includes Aberfoyle Park, Chandlers Hill, Flagstaff Hill and Happy Valley in South Australia. The area is about 17 kms from Adelaide.

The location of digitally active households is becoming an increasingly important question, as mobile penetration and use climbs. It fundamentally changes the optimal marketing approach and channel strategy.

Using data from our household surveys we track the proportion of households with a preference for using digital devices – especially smartphones – for their banking interactions and other online activities. The latest data, which will flow in due course to our next edition of the Quiet Revolution – our channel analysis report – shows that there are large numbers of digitally savvy consumers and small businesses who want more digital, and less branch. They want a “mobile first” offering.

To illustrate this we map the current branch representation around Brisbane, based on the latest APRA points of Presence report.

Then we mapped the number of households by digital segments – identifying those seeking a mobile first solution – to postcodes. There is a striking mismatch between the two.

Here is the top 10 listing by number of digitally aligned – mobile first – households across SA. They vary by segment, age, zone and region.

This information is useful to anyone wishing to engage with these households because it highlights where the centre of gravity for online initiatives should be focussed. The point is that although households are in the digital world, they still have a geographic centre. Digital still has a geographic sense.

Looking at the banks, it seems that they are not heeding the geographic concentration of mobile first households, and nor are they fully comprehending the changes afoot. We think it likely there will be significant stranded costs in the branch network, and insufficient focus on “mobile first”banking offerings.

Households are leading the way.

Next time we will look at the state of play in Perth and then reveal the top ten digital suburbs across Australia.

Top Digital Suburbs In Brisbane Region

We continue our series looking at Australia’s top digital suburbs by looking at households in QLD. The top postcode is 4670, in the Bundaberg region about 297 kms from Brisbane. In fact across the state, there are a number of regional hot spots where digital usage is very high.

To illustrate this we map the current branch representation around Brisbane, based on the latest APRA points of Presence report.

Then we mapped the number of households by digital segments – identifying those seeking a mobile first solution – to postcodes. There is a striking mismatch between the two.

Here is the top 10 listing by number of digitally aligned – mobile first – households across QLD. They vary by segment, age, zone and region.

Households are leading the way.

Next time we will look at the state of play in Adelaide and subsequently explore developments in other regions, before revealing the top ten digital suburbs across Australia.

The Top Digital Suburbs In Melbourne

We continue our series on where most digitally active households reside. Today we look in the Melbourne district. The largest number of digitally active households reside in the post code of 3977 which includes Botanic Ridge, Cannons Creek, Cranbourne, Cranbourne East, Cranbourne North, Cranbourne South, Cranbourne West, Devon Meadows, Devon Meadows, Five Ways, Junction Village, Junction Village, Sandhurst and Skye.

To illustrate this we map the current branch representation, based on the latest APRA points of Presence report.

Then we mapped the number of households by digital segments – identifying those seeking a mobile first solution – to postcodes. There is a striking mismatch between the two.

Here is the top 10 listing by number of digitally aligned – mobile first – households in VIC. They vary by segment, age, zone and region.

Households are leading the way.

Next time we will look at the state of play in Brisbane and subsequently explore developments in other regions, before revealing the top ten digital suburbs across Australia.

The Top Digital Suburbs In The Sydney Region

Where do most digitally active households reside? This is becoming an increasingly important question, as mobile penetration and use climbs. It fundamentally changes the optimal marketing approach and channel strategy.

To illustrate this we have mapped the number of households by digital segments – identifying those seeking a mobile first solution – to postcodes. Then we also map the current branch representation, based on the latest APRA points of Presence report. There is a striking mismatch between the two.

Lets take the Sydney area as an example. Below is the branch representation, with the largest number of branches in the Sydney CBD, and a smattering across the region.

Now looking at the representation of mobile first households, we see a very large number in Sydney CBD, as well as hot spots across the Sydney basin.

Here is the top 10 listing by number of digitally aligned – mobile first – households in NSW. They vary by segment, age, zone and region.

Households are leading the way.

Next time we will look at the state of play in Brisbane and subsequently explore developments in other regions, before revealing the top ten digital suburbs in Australia.

UK Internet Users Reject In-Store Shopping

From eMarketer.

Internet users in the UK prefer digital channels to in-store shopping in almost every stage of the path to purchase, according to a survey from retail consultancy Pragma conducted in June 2016. In fact, only when it comes to making the final purchase decision and resolving any post-purchase issues do those surveyed prefer the in-store experience.

Internet users in the UK overwhelmingly prefer digital shopping for keeping up-to-date with the latest products, attaining detailed product information, and even simply browsing products. The Pragma survey reveals that in-store experiences are failing users for these basic shopping tasks.

Even the act of making a purchase is one preferred to be done online. Brick-and-mortar shopping was only judged better for making the final decision on a purchase or sorting out any issues afterward.

It’s little wonder that internet users in the UK are directing ever more of their shopping activities to the web. In fact, nearly 95% of those surveyed said in June that they shopped online the same amount or even more often than two years ago. And while, at some point, as more and more people shop exclusively online, that “more” response will top out and shrink, the fact that only 4% say they’re shopping online less than they used to—compared to 32% shopping less in physical stores—reinforces the idea that in-store shopping is failing users.

In June 2016, eMarketer estimated that there will be 44.4 million digital shoppers in the UK in 2016, which accounts for 93.8% of all UK internet users. These digital shoppers will browse and research products online, but not necessarily make a purchase that way. However, a large share of them will go on to buy: 94.9% this year, suggesting shoppers are happy with the experience. By 2020, 95.3% of digital shoppers in the UK will make a digital purchase.

APRA Tweaks, But Retains ADI Points of Presence Reporting

APRA has announced they will continue to report ADI’s point of presence data following a consultation paper last year, with some changes. We welcome this decision, because the data is a valuable resource for those tracking channel evolution and migration.

APRA received seven submissions from ADIs and industry associations in response to the proposals outlined in the discussion paper.

The submissions indicated support for retaining the PoP statistics, with limited feedback provided in relation to the proposed content and format of the streamlined PoP statistics.

Three submissions commented on the costs of the current PoP data collection, with one of the submissions including detailed costings. Based on these submissions, the transitional and ongoing costs of the PoP data collection appear to be small.

On the basis that most of the submissions supported retaining the statistics, and the relatively small costs of reporting, the benefit of publishing the statistics outweighs the ongoing compliance costs of submitting data on the proposed form.

After considering the submissions, APRA concluded that it should continue to collect and publish PoP statistics, but in a modified form. APRA therefore intends to implement the following revisions to the PoP statistics:

establishing a tighter definition of other face-to-face points of presence, which will result in greater consistency of reporting of these service channels;

removing the requirement to report non face-to-face points of presence;

collecting more accurate locational data of the points of presence; and

capturing additional information about the remoteness of these locations using the Australian Statistical Geography Standard.

To lessen the burden of reporting on the current PoP reporting form for 2016, APRA is issuing an exemption that will reduce the reporting requirements in relation to the number of service channels. This exemption will allow ADIs to report no more than the four service channel categories that will be included in the revised reporting form ARF 796: branches, other face-to-face points of presence, ATMs, and EFTPOS terminals. ADIs will not be required to provide information on non-face-to-face point of presence, such as unmanned branches, telephone banking, internet banking and call centres.

The first edition of the streamlined PoP statistics for the reporting period ending on 30 June 2017 will be published in late 2017. In the interim, APRA will release the current version of the PoP statistics for the reporting period ending on 30 June 2016, with reduced service channels 24 August 2016.