Why all banks aren’t need to become a «100% mobile»?

Over the past two years the concept of «mobile bank» has become a real disruptor in Ukrainian financial sector. The first Ukrainian mobile-only bank changed the rules of the game in the banking sector — changed it quickly and radically. Earlier there was one obvious pioneer of innovation in the banking fintech segment in Ukraine. But now everything is different. Everything has changed: the basic set of functions for launching the application has increased, but the time for introducing new functions has decreased. Also, we can the increasing expectations for the pace of implementation of this new functions.

A customer with his/her money operations to be wants faster, more eye-pleasing, reliable, and in the shortest possible time. This is what niche technology media, fintech-influencers and advanced banking products users are talking about. Reports about this become the basis for other Ukrainian banks to build their strategies, which are firmly convinced that they must be 100% digital.

So, why are the bank branches are still relevant?

But there is another opinion — full transition to digital doesn’t work for everyone. This is evidenced by the research of the USA-based marketing agency J.D. Power & Associates. Based on this, we can draw interesting conclusions — for example, offline banking is far from dead and even necessary. The data are based on the observation of American customers, but after analyzing them, I realized: they will be indicative of Ukraine as well — with minor amendments.

According to analytics, customers, who are using only online banking are significantly less loyal to the quality of the services provided than those who are using banking operations in digital format, but at the same time visiting branches. A high-quality personalized approach, as it turned out, has great importance, even among millennials.

Two rather contradictory, but still relevant conclusions can be drawn from this part:

The segment of customers who use online & mobile banking, continues to grow. However, almost 75% of «onliners», continue to use branches along with online banking. Leading banks have a higher percentage of customers who use only online banking. Therefore, banks are offering them more remote opportunities, increasing the level of loyalty. However, they don’t correspond to the personal experience of clients, where medium-sized banks have an advantage.

In other words, small and medium-sized Ukrainian banks with properly working online support and operational processes, have an advantage over large leading banks in user experience. For Ukraine, this will, first of all, be relevant in issues of premium banking.

The main reasons why offline banking is still holding it’s positions

This research also have an interesting segmentation of users by the degree of using online and offline to access banking services:

Branches only — 10% (only offline tools for 3 months) More branches than online banking — 44%. (about 10 interactions with online or mobile banking per month and 2–3 branch visits in 3 months) More online banking than branches — 13% (about 9 interactions with online or mobile banking per month and 1 visit to branches in 3 months) Online only — 28% (online tools only for 3 months).

Such analytics is almost completely relevant for Ukraine. Radical indicators may be the same — especially when you consider how much online and mobile banking are embedded in the consumer chain. As for «rather online, than offline» and vice versa — it’s a discussion matter. Online banking is more popular in Kyiv and big cities. The remaining regional centers are more loyal to the bank branches. And this is the most important moment, which should not be forgotten for minor banks.

Online access to your account and the most popular banking operations is the basic story for any successful bank. But a goal to be a 100% digital can’t be a solution. Mobile banking should be convenient, efficient, secure and must look modern. However, it’s unlikely that mobile banking can replace the visit to the bank branch for solving the most important financial tasks in the foreseeable future. This is especially true for clients over 40 years old. Any bank that takes this into account in the process of digitalization, will only win.

CEO of the international payment system LEO, the shareholder of IBOX Bank