Given the intense hunt or growth in atight market, this seems improbable.Yet that is exactly what’s happeningat many regional banking companies.The customers in question arethose who have drited away romthe branch and now do most o theirbanking at arm’s length. Seldom seenin lobbies, these “virtual domiciled”customers have built their bank-ing lives around alternatives such asonline and mobile banking, automatedteller machines and contact centers.According to Novantas research,inrequent branch users now consti-tute rom 20% to 40% o the retailcustomer base at various regionalbanks (Figure 1). And their rankslikely will grow, mirroring the trendin other retail industries, such aselectronics stores and book storechains, which have seen dwindlingcustomer trafc in storeront outlets.Banks need an organized,deliberate response to this trend. Yetmost have thus ar ailed to eectivelymanage the critical virtual domiciledsegment.To successully retain and growthis customer group and capture agreater share o wallet, retail banksmust change the way they do businessacross fve areas: sales and market-ing; controlling delivery costs; networkconfguration; customer analytics; andultimately, organizational structure.
Clearly, the near term priority is salesand marketing. Banks have an imme-diate opportunity to cross-sell credit tothe deposit customer base. Yet rare isthe bank with a robust multi-channelstrategy to cross-sell virtual-domicileddepositors. Players that succeed incapturing this business in the next 12to 18 months will enjoy a virtuallyunassailable lock on the virtual domi-ciled customer relationship.While branch lobby-based initia-tives still deserve considerable atten-tion, these need to be complementedwith a more deliberate outreachto the multi-channel customer. Ourresearch indicates that the major-ity o new retail customers acquiredover the past fve years seldom seea bank lobby. Banks need to learnhow to reach these customers on theirown terms, and provide productsthat are clearly designed or non-branch marketing and servicing.
BY RICK SPITLER AND DAVE KAYTES
Retail banking customers increasingly are skipping branch lobbies in favor of remotealternatives such as online banking. Are they receiving adequate management atten-tion? Are retail banks overlooking a major segment of their customer base?
Virtual Customers: Who’s Minding the Store?
“We estimate that currently25% of the retail customerbase is attitudinally receptiveto using alternative channelsas complete substitutes foreveryday branch transactions.And we believe the receptivityratio is destined to increase.”
81%41%37%29%27%13%20%23%25%26%29%32%33%33%36%37%37%42%57%99% A BCDEFGHI JK L NMO
1a: Percentage by Bank Category1b: Percentage by Bank(Disguised)
Credit Unions and Community bankshave been excluded rom igure 7bdue to individual bank sample sizes.
Figure 1: Virtually DomiciledCustomer Distributions
As seen in