Read The Introduction To “The Digital Tipping Point” Series HERE!
For decades, customers were most often motivated to buy a financial product when they had a life event. By 2014, however, 69% of purchases were triggered by something a customer learned while engaged in “constant goal seeking” on their digital network (Figure 3). Thirty-eight percent acted because they learned they needed something, and 31% acted because they learned of a superior solution.
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For example, the birth of a child traditionally motivated a visit to a branch to explore a college savings solution and perhaps a car loan and a second mortgage (Figure 4). As branch traffic waned, bankers assumed that customers were following the same purchase process but using multiple channels. In response, banks built digital capability to support preliminary shopping, with the goal of seamlessly migrating the customer into the branch to finish the process. They invested heavily to upskill branch staff for the more difficult challenge of serving educated customers who arrived well into the process.
Unfortunately, customers engage in constant goal seeking using their own digital network, not a bank’s network. Continuing our example, customers who should be saving for college likely become aware of the need, learn about relevant solutions, and determine the best alternative using some combination of news feeds, nance sites, blogs, and social networks. Often the “solution” they learn that they need is provider and product specific, and they open the new account without ever “shopping around” in the classical sense.
Banks that wait for these customers on their new digital channels the way they once waited for them in a branch are not part of the customer’s networked learning process—and therefore not part of their consideration set. Only 38% of customers who purchased a retail bank product last year report they learned from their bank. Therefore, even among customers who visited the branch every week, only 30% even considered doing that additional business with the incumbent bank.