How are banks attracting new customers? By keeping them away

April 4, 2014     By : Andrew

How are banks attracting new customers? By keeping them away. Banks are finding new growth opportunities through online and mobile channels, proving once more that consumers are increasingly attracted to the convenience and speed of mobile and online solutions. Understanding consumer trends will help banks understand how to position themselves as we move into an increasingly mobile reality.

Bank foot traffic is on the decline. In fact, from 1992 to 2012, branch transactions decreased by nearly 50%. Will local branches be deserted by the end of the year? No. But the forces driving individuals away from in-person banking are only getting stronger. Let’s look at some specific ways this is happening.

file infofraphics new account production

Let’s start with credit cards. How often do you think online shoppers stumble across that perfect appliance, which happens to be on the last day of a great sale, but they don’t have the available funds to make the purchase? My guess is it happens all the time. Before online instant approval, shoppers might need to visit their bank, apply for a card, wait for approval, and ultimately never start the process knowing what lies ahead. This is just one example of banks reaching their audience online without ever seeing them.

Citibank reported an increase of 472% after implementing  online instant account opening, and only needed to hire an additional 38% of new employees to handle the growth. This is a powerful example of how, not only does catering to the millennial mindset of easy and instant create results, but it does so at a fraction of the cost.

Investing in online account acquisition can be up to 60% cheaper than traditional means of acquisition, mainly direct mail. Many banks seem to get the picture. In 2007, 55% of new credit card accounts resulted from direct mail. Four years later, that amount was down to 38%.

While online account acquisition produces more accounts with lower investment, there still is an advantage to direct mail. Many banks value the quality that comes from their ability to pre-screen individuals receiving credit card offers. This allows for a more qualified account acquisition, whereas online acquisitions are not so easily screened. For this reason, banks continue to utilize both traditional and online methods.

Beyond new accounts, there are a number of ways that online and mobile innovation is keeping customers out of their local branches.

Cardless ATMs

I recently wrote about cardless ATMs as driven by millennial demand for all things quick and convenient. While giving people a mobile-friendly way to use ATMs might not directly pull them out of the branch, there are features included that certainly will. For example, The Diebold cardless ATM app allows users to transfer funds to other individuals. The money can then be picked up at an ATM by means of a one-time SMS PIN. At no point does either party need to interact with a teller to transfer the money.

Mobile Deposits

Most banks now allow customers to deposit checks through their mobile app by taking a picture of the check. If a check comes to me in the mail, and I can take a picture right there, or drive to the nearest bank, I don’t have to think hard about which option makes more sense.


In the recent past we have seen emergence of completely new types of banks. There are many words that come to mind if you tell me about a bank that literally has zero branches and one of them is convenience. And that is exactly what Simple has set out to be, an entirely mobile and online way to bank that is utterly simple. With more than 100,000 customers in less than 2 years, it appears they have figured something out. And a traditional bank realized its importance. Banco Bilbao Vizcaya Argentaria (BBVA), Spain’s second-largest bank acquired Simple earlier this year for ~$117 M. But the company will operate independently along with BBVA US operations.


While the argument may be compelling to abandon the local branch, they still do meet customer needs on multiple levels.

The “Others”

We have established that the digitally comfortable masses are both growing and moving society, but there is still a very large populace that either doesn’t understand tech, or simply doesn’t trust it. These customers are just as important as any other. Many times these are customers who have been loyal for longer than the tech-friendly customer has been alive. A physical location with real people is crucial to these individuals. Although the rate of growth of connected devices and individuals adopting them is growing at a very past pace.

Online/Mobile will have to further innovate to meet these needs, needs that are currently only met by individuals in brick and mortar branches. I have no doubt that the industry will get there before long. Until then, we can expect our local bank with friendly smiling faces to be around a little longer.

Crisis Management

Sometimes it just helps to look someone in the eye and hear them tell you they have it under control. While phone and chat support pick up some of the slack, there are many who want to speak face-to-face in the moment of crisis. Online and mobile banking innovations have a ways to go before they can give customers this sense of intimacy, but I suspect that innovation is not too far off.

Do you see online and mobile banking driving brick and mortar branches into extinction? What other ways do you see the banking industry favoring online over in-person? Share your thoughts below.

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Andrew Stein is a staff writer at Let’s Talk Payments. His interests include new and emerging technologies, and anyone daring to shake things up. Andrew believes informative content is a key tool in the hands of game changers, and is dedicated to doing his part in providing such content.
  1. #1 Andrew Sampogna 7 April, 2014, 16:07

    As a long time credit card marketer in Canada, I appreciate and can validate your comments regarding Online acquistion channels driving better credit card acquisition ROI. In fact, I can’t agree with you more! Online acquisition certainly does drive a reasonable number of gross response (applications), but approvals (net response) and “customer quality” meaning high loan losses is a story of disappointment.

    Very true points regarding direct mail acquiring stronger credit worthiness and long-term customer profitability. Again, I can validate that as well.
    There is a history and definely an element of trust that Canadian’s have when transacting their finances through a trusted source such as Canada Post. The fact that banks are coming up with creative ways to deposit a hugely “trusted” payment device that is mostly mailed person to person is proof of that.

    Do you have any thoughts or experience on the “scalability” of Online credit card marketing? Its been my experience that Online sales drives good cost per application/card and therefore high ROI, because the dominator (online marketing cost) is generally low.

    My issue with Online marketing has always been about scaling the low cost advantage. For example, Online marketing would drive a cost of acquisition of $50 and Direct Mail $80. Problem is, I’d only get 100 online sales vs. getting 1000+ sales using direct mail over a fixed period of time. Strategically, I would want to shift more marketing funds to Online (without discounting the offer) to scale up volume. I have consistently seen that its not possible, because Online marketing spend has a ceiling on various online marketing tactics. The ceiling is the point where cost of acquisition increases rapidly and therefore ROI decreases because there are only so many people out there seeing and/or seeking out credit cards. This is the natural result of Online tactics being “pull” marketing method. You just can’t push it out (e.g. throw money into it) to the publice as you can with direct mail marketing. This is a big challenge for credit card marketers, each with a common thread KPI that requires them to achieve a high volume of cards over a fiscal year. I am looking forward to your comments.

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