Increasing Assets and Net Incomes with Fewer Offices According to the Federal Deposit Insurance Corporation (FDIC), the total number of US bank offices continues to decline, with 88,896 during Q3 2018, compared to 90,022 during Q3 2017, a number that has been declining every year since 2009’s 100,238. FDIC-insured and -supervised financial institutions subsequently have also declined: insured, from 5,737 for Q3 2017 to 5,477 for Q3 2018; and supervised, from 3,668 to 3,527 for the same comparative quarters. Q3 2018 data from the FDIC indicates the top 5 financial institutions in the US remain the same as 2017: JPMorgan Chase, Bank of America, Wells Fargo Bank, Citibank and U.S. Bank; however, Bank of America is now #2, replacing Wells Fargo.

Advancing Towards Digital Transformation Still Alludes Many Banks Although there are various reasons the number of banking institutions and offices are declining, one of the most important is failing to address aggressively the opportunities of digital transformation, although 90% expect it to change the industry radically. Banks have embraced artificial intelligence (AI) for risk and fraud management, but less so for customer applications. According to Autonomous Next, the banking industry could realize a 25% cost reduction with AI, or a $450 billion opportunity, by 2030. Digital Banking Report’s 2018 Innovation in Retail Banking Report found open APIs (application program interface) will have the largest technological impact on banks during 2019; however, banks are not prepared for this and other digital transformations.

More Consumers Turn to the Digital Channel Approximately half of the 2016 $3.9 trillion bill-pay market – housing, utilities, taxes, insurance, loans, etc. – were transacted digitally and Business Insider Intelligence forecasts it will increase to more than 75% by 2022. Unfortunately, banks are not making the investments in technology to maximize their share of this market, as many younger adults, specifically, are choosing third-party payers, because they don’t think banks’ systems are secure or convenient. Chatbots are one of the technologies that could benefit banks and their customers, as more than two-thirds of customers 18–70 years of age would use a chatbot after hours instead of visiting a bank branch the next day.

A Mobile Society Requires Mobile Banking According to a September 2018 Morning Consult survey for American Bankers Association, 93% of Americans said their experience with their bank’s online and mobile app was “excellent,” “very good” or “good.” Despite their level of satisfaction, 38% of Millennials, 44% of whom are most likely to make mobile payments, didn’t complete the account-opening process, because it took too long, and 31% told others, opened an account at another bank or complained. Business Insider’s Mobile Banking Competitive Edge Report designated Citi as the top bank, scoring a first in account access and tied for first in account management with 5 other banks. Wells Fargo was second overall.

Satisfaction with Banks Runs Hot and Cold According to Kantar’s first report about banks marketing to women, only 61% of the women surveyed said their current financial institutions offer some level of personal engagement and conversation with a financial advisor. The J.D. Power 2018 U.S. Retail Banking Satisfaction StudySM reports digital-only and branch-only customers were least satisfied with their banks, with scores of 791 and 804, respectively, on a 1,000-point scale. Branch-dependent customers, or those who had visited a branch two or more times during the past three months and also used online or mobile banking channels, were the most satisfied, with a score of 823.

Banking on a New Future As much as many banking customers prefer digital interactions, some banks (Citi, Chase and Bank of America) have discovered an Apple Store-like environment, with tablets, video-conferencing and other technologies are attracting customers. During 2019, more banks are expected to advance from traditional demographic targeting to a personalization model “based on lifestyles, values, aspirations mindsets and underserved needs.” (Accenture) An even more-advanced trend is forecast for 2019, or AI- driven predictive banking. Not only will banks strive to target individual customers through personalization, but also be able to predict their needs and provide a set of the best solutions in real-time.

Advertising Strategies As banks, especially regional banks competing against the national banks in your market, move forward with their digital transformation, the exact digital features (and benefits) they’re adding should be the central message of their TV and other advertising content. Clearly, banks must do a better job marketing to women, which is a competitive opportunity for regional banks. Their advertising should feature an on-camera and/or voice-over woman and offer an incentive to women to schedule a free meeting with a financial advisor. Although regional banks may not be able to transform one or more of their branches into Apple-like stores, they can feature the addition of tablets, video-conferencing and other technologies in all their advertising messages and images.

New Media Strategies Use social media to target younger adults with short videos about how the bank’s bill-pay system is secure and convenient and the new features and technologies being added to improve security and convenience. Use an email campaign and/or social media to conduct a quarterly poll/survey to determine customers’ level of satisfaction with the bank’s services. Consider an incentive, such a gift card, for every submission to maximize participation. As banks add new digital features, such as chatbots, they will want to record a number of short videos as Website content and social media posts, explaining how to use the feature, including screen captures and/or mock scenarios.