Behavioral disruption – part 3

There was a time when the bank was a destination. You’d straighten your tie, smooth your coat collar and put on your hat … wanting to look your best before you’d head to the bank. Well, you can hang up your coat and hat my friends! Those days are over.

Consumer behaviors are changing – never more so than in the last 20 years. These changes are due to four behavioral disruption phases, and each phase is disruptive enough to be a game changer.

 

• Phase One - Arrival of the Internet and social media – control and choice

• 10 years ago, 60% of all transactions where conducted in a branch. Today, 95% of all transactions are done through an ATM, call center, Internet and mobile phone. In summary, 60% of transactions “back then” were done in-person compared with a stunning 5% today.

• Phase Two - Arrival of smart devices and apps – anytime anywhere

• U.S. market has over 100% adoption rate of mobile phones.

• As of December 2011, smartphone users average 94 minutes a day using apps compared to 72 minutes using web browsers.

• 99% of mobile banking users view balances.

• 90% of mobile banking users view transactions.

•  10 billion dollars have been moved using mobile transfer/bill pay.

• More than 50% of iPhone users have used mobile banking within the last 30 days.

• 33% of mobile banking users monitor accounts daily, 80% weekly. 

• Phase Three – Arrival of the mobile wallet – cardless and cashless

• Mobile payments on a broad scale including near-field contactless mobile wallets, micropayments, convergence of the mobile phone with credit/debit cards.

• If only 50% of cash transactions are replaced by electronic stored value cards, debitcards and mobile wallets, the FI branch infrastructure becomes cost prohibitive.

•  In 2000, 59.5% retail payments were made by checks. In 2010 it was 4.3%.

• Phase Four – Anyone is a bank – pervasive and ubiquitous

• Banking is no longer somewhere we go, but something we do.

• Banking services and products are delivered wherever and whenever a customer needs the utility of a financial transaction.

• Banks and CUs do not have the ubiquitous coverage to deliver these products and services in the new world.

• New partnerships will be required.

•  Non-traditional value chains will meet banking needs.

• This phase will produce a fundamental split between banking as distribution and banking as a product/manufacturing or credit granting capability.

As I mentioned in Part 1 of this series, large credit unions are getting larger, the smaller credit unions are getting smaller and being merged into larger credit unions. When the dust settles, that means fewer credit unions overall. And the one’s that succeed will be the ones who not only keep up with, but stay ahead of consumer demands as defined by the behavior disruption phases above.

EPL, Inc.