Before competition and partnerships with FinTech and Big Tech emerged over the past few decades, banks had plenty of competition amongst themselves. While technically all banks chartered by the U.S. government are considered national banks, only a handful have achieved ubiquity across the country with more than $150 billion in deposits, as categorized by J.D. Power.
Competition for market share between these omnipresent national giants and large regional banks (that have at least $55 - 150 billion in deposits) used to be driven by branch presence and customer service efficacy, but now has largely centered around digital.
According to J.D. Power’s annual survey, big national banks trailed far behind regionals when it comes to customer satisfaction in 2018, but have significantly narrowed the gap in the past three years. Particularly over the course of the pandemic, large national banks bounced back by combining financial assistance (i.e. waived fees, late payment forgiveness) with even more robust digital tools and offerings.
To ward off the threat of national banks capturing even more market share, particularly from young millennials and Gen-Z, regional banks have begun to grow their market presence by targeting specific niche segments across the country, like healthcare and technology. For example, Citizens Bank, headquartered in Providence, RI and historically operating in the northeast U.S., has extended their Citizens Pay product across the country to provide consumer financing for Apple, XBox, and BJ’s Wholesale products. KeyBank, headquartered in Cleveland, OH with a focus historically on the midwest and New York state areas, launched a “national digital bank for doctors” under their acquired Laurel Road brand in early 2021.
No longer confined by specific regions, the banks have begun servicing these targeted segments with digital-first platforms to gain a strategic advantage.
While unique offers like those above may help get customers in the door, regionals seem to struggle with the payoff and continue to fall behind larger competitors when it comes to customer satisfaction.
From 2020 to the 2021 J.D. Power U.S. Banking Mobile App Satisfaction Study, large national banks earned an 8 point increase in customer satisfaction with their banking apps, while regional banks’ scores decreased by 17 points.
Capturing market share, whether it be retaining current customers or attracting new, often younger consumers — is more dependent on users’ satisfaction with their mobile app than ever.
When it comes to acquisition, 74% of respondents to a Business Insider Intelligence survey say they would research a bank’s mobile features before opening an account. Also according to the same survey, mobile banking capabilities is now the second most important factor to users when choosing a financial institution, only behind fees.
User engagement with their bank’s mobile apps grew during the pandemic, and data is already showing that it will continue to be an important touchpoint — almost 88% of respondents to an S&P survey who increased their mobile app usage also expect to either maintain or increase their frequency of app use going forward. Mobile capabilities drive retention as well; 40% of consumers say they’re likely to switch who they bank with to get better digital tools.
The reality that we know from our banking clients when it comes to investing more in digital is that not every bank has a $12 billion annual tech budget (obviously) like Chase. And no matter how big your tech budget is, every company needs to make strategic, customer-driven decisions to prioritize where to invest, what features or capabilities to build first, and how to optimize their resources.
Too often, companies approach making their next-best tech investment as more of an art than a science. They may have qualitative insight from talking to customers, but to identify the highest opportunity areas, product teams need to quantify:
To help our clients make these prioritization decisions and utilize their resources effectively, WillowTree’s design teams operate in a constant state of collaboration and iteration. Designers work in cross-disciplinary teams with content, strategy, research, engineering, and analytics to create the most impactful experiences. This environment produces technical fluency that drives innovative design approaches and realistic design ideas, all continually informed (and reformed) by the best available research.
WillowTree’s design process is broken down into three major components:
Each of these phases include activities to gather and measure input from users, business stakeholders, and technical experts. Mixed-methods user testing led by our PhD researchers generates new concept ideas and measures user impact. Business value is never determined on an island and is instead a team effort between client stakeholders and WillowTree to gather context. Technical architects weigh in on implementation complexity, accounting for factors like API development, 3rd-party dependencies, and magnitude of functionality.
Whether it’s layering a more intuitive UI on top of a cross platform app, redesigning the information architecture of a native app, or envisioning a new feature, WillowTree’s teams can help your regional bank get ahead of the curve in mobile design. If you’d like to explore engagements, reach out to our team today. We’d love to hear from you.