In 2007, The Council surveyed members on “what channels will best serve customers for purchasing products end-to-end?” for both 2007 (“today”, then) and in 5 years time (2012). Responses were unambiguous: a sharp decline in branch sales – from well over 80%, to just over 40% – and a sharp incline in on-line sales, from just under 10% to just short of 50%.

Here we are in 2012 and it is clear these projections were wildly optimistic. But today the stakes are higher: banks that do not enable non-branch sales will miss crucial opportunities for cost reductions and brand differentiation. The question is – why have on-line sales failed to realize their potential?

  1. Banks continue to hope for a “return to normal” – Confronted with uncertainty, many institutions have fallen back on what they know – the branch, where they have most tried and tested experience selling – rather than try to build something new. Economic austerities inclined toward a less aggressive “run-the-bank” versus “change-the-bank” split, notwithstanding the potential cost savings associated with the latter. As sales growth flattened, increasing productivity in the branch appears a faster path to growth than improving the online sales experience.
  2. The branch is viewed as the home of customer relationships– Many senior executives remain unconvinced they can effectively manage relationships through non branch channels. Indeed, the Council’s data does suggest that customers who use technology-only tend to feel less committed to their banks. Accordingly, serious concerns remain around on-line relationships becoming too transactional, losing the depth otherwise assured by in-person interactions. As a result, banks must focus on creating a unique experience online.
  3. Banks are not teaching their customers how to do business – CFC data shows that as many as 30% of customers have no experience doing even basic tasks online, and another 20% only use to the web to access products they already own. The banks that have been most effective at increasing online sales and activity do so by investing in customer education around web functionality.
  4. Internal accounting still over-estimates the contribution of the branch, while not putting enough pressure on the web – As a general rule, remote channels receive scant recognition for the sales they aid, and no domiciling of the account openings they actually record. Such systematically biased branch-centric accounting precludes an objective, fact-based conversation around right-sizing branch networks. It is difficult to build a business case for the online channel if it always appears unprofitable next to the branch. Without firm revenue goals for itself, the web will continue to lack urgency.
  5. Bank websites are not offering the right kind of help – The web is the dominant channel for research, but bank sites are not giving prospective consumers enough help when it comes to researching products on-line. By failing to provide the content and functionality to support customers throughout the entire purchase journey, customers are encouraged to go elsewhere for information – such as various off-domain social media sites. In other words, the service to sales process so crucial to the branch barely exists on bank websites. As CFC survey data shows, customers who rely on digital channels rate their banks poorly in key service indicators–like guidance during the sales process, ease of communication, and access to knowledgeable staff.