Finance brands face Asia test

16 December 2011

SINGAPORE: Financial brands in Asia need to adapt their business models to reflect the increasingly important role digital media is playing in the lives of their customers, a study has argued.

McKinsey, the consultancy, surveyed 20,000 people in 13 regional markets, breaking out results for the advanced markets of Australia, Hong Kong, Japan, Singapore, South Korea and Taiwan.

Across all the featured nations, customer visits to bank branches had declined by 27% since 2007, the first contraction on this measure since the company began tracking such activity in 1998.

In the more developed nations featured, participants engaged with their bank in some form or another an average of six times a month, a total that has remained largely stable.

However, the way they did so has been subject to change, as digital channels like the web and mobile are utilised 3.2 times a month, whereas branches and the telephone scored 2.6 on this measure.

More specifically, 51% of banking transactions in the six mature markets now happen digitally, compared with 44% in branches. When including ATMs, the first of these figure climbs to 65%.

A further 27% of contributors stated a preference for opening new savings or basic investment products digitally, an expansion of five percentage points from 2007.

The amount of people agreeing they were less keen to utilise a branch for this purpose had also grown by six percentage points.

A majority of contributors in the six mature markets used at least five channels – from branches and call centres to the web and word of mouth – when researching savings and investment products.

This figure stood at 1.7 for completing transactions and 1.8 for accessing customer services. Over all three stages of the banking process, just 21% of customers now use only one channel.

McKinsey concluded the move towards making such decisions without the involvement of banking staff was gaining pace.

"It is likely to take seven-to-ten years for the digital adaptors to reach the self-first state, and about three to five years for those in the multichannel markets to do so," it said.

Data sourced from McKinsey; additional content by Warc staff