What are the biggest customer engagement concerns for banks and credit unions and the consumers they serve in 2023?

  • Optimizing staff, providing opti-channel customer engagement, and improving digital adoption have emerged as critical factors for short- and long-term success.

If there’s anything the first two years of this decade have taught us, it is the sheer unpredictability of today’s world. The delicate fragility of the economy and geopolitics requires that banks and credit unions be especially attuned to the changing needs and preferences of their customers. Since most financial products are relatively commoditized, the only chance financial institutions have to differentiate themselves is through superior service and outstanding customer engagement.

In August 2022, Engageware partnered with market research firm, Infosurv, to conduct the annual survey of banking professionals in the United States. This research explores the strategic priorities of U.S.- based banks and credit unions, their current initiatives, and their outlook on customer engagement for the coming year. This year the research was also complemented by a survey of U.S. banking consumers’ attitudes, behaviors, and expectations.

In this report, we look closely at both of those surveys to explore trends and perceptions of customer engagement among industry professionals and unpack the priorities and strategies banks and credit unions plan to employ for fostering stronger customer engagement in 2023.

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Economic, Geopolitical Factors Affecting The Current Banking Climate

Last year’s inaugural research1 was conducted while we were still collectively figuring out how to navigate the pandemic’s impact on business and consumers. When we spoke with bank and credit union professionals in August of 20212, most were focused on changing health and vaccination guidelines, grappling with the effects of the Great Resignation on their workforce and scrambling to understand how to best serve customers.

It was a challenging time for all as COVID-19 continued to play a leading role in much of our lives. After a year of rapid digital transformation and accelerating consumer expectations, skepticism was also on the rise. Banks and credit unions faced severe employee retention challenges, and workplaces struggled to make a hybrid model successful. The housing market boomed characterized by incredibly high demand, low inventory, and low-interest rates, placing strain on mortgage lending and refinancings departments.

Revisiting the market in August 2022 we found much has evolved. COVID is still a reality, but it is no longer center stage. On the geopolitical front, global events such as the War in Ukraine, civil unrest in Iran, as well as domestic events (midterm elections, increasing political polarization and more frequent extreme weather) have significantly impacted global financial markets.

The bottom line? The economy is top of mind. Inflation, rising interest rates, a cooling housing market, and the possibilities of recession are all significantly influencing the behavior of banks and credit unions — and the consumers they serve.

Recession Worries Impacting Banking Consumers and Professionals

We asked both banking consumers and banking professionals how they are thinking about the current economic climate, and most said they are worried the U.S. economy is in – or soon to be in – a recession. (Figure 1)

At the time of the survey (August 2022) nearly all banking professional respondents (91%) and a large majority of consumers (84%) said they think the U.S. economy is either currently in a recession or will be in one soon. Banks and credit unions were even more likely to believe the country is already in recession (57% vs. 46% for consumers).

Almost 9 in 10 respondents in both groups were also at least “a little worried” about a recession’s impact. That said, fewer stated they were “very worried” about the impact to their customer relationships (13% of banks and credit unions) or personal financial situation (36% of consumers). Further exploration into how a recession would alter their actions indicates a stronger sense of urgency, as we’ll share later in the report.

A chart from Engageware's Survey comparing responses from banks and credit union to consumers  for the question Which best describes your opinion regarding the current U.S. economy?
RECESSION, OR NO?
Q: Which best describes your opinion regarding the current U.S. economy?

In the Event of a Recession, Relationship Banking Will Be More Important than Ever

It is perhaps no surprise that an economic downturn would have a ripple effect on banking behaviors and plans. In a recession, 75% of consumers told us they plan to scale back their planned financial activities. (Figure 2)

A chart from Engageware's Survey showing responses from consumers for the question In a recession, how likely will you scale back on planned financial activities and/or investments?
CONSUMER RECESSION IMPACT
Q: In a recession, how likely will you scale back on planned financial activities and/or investments?

Consumers Want More Financial Guidance in a Recession

Consumers also say that, in challenging economic times, they expect their primary financial institution to provide additional support beyond the obvious products and services offered. In addition to expecting lower fees, competitive rates, and late payment forgiveness, consumers indicate they would also expect recession strategy planning (34%) and even 1-to-1 financial planning (16%). (Figure 3)

A chart from Engageware's Survey showing responses from consumers for the question In what ways would you expect your bank or credit union to support you during a recession?
CONSUMER EXPECTATIONS DURING RECESSION
Q: In what ways would you expect your bank or credit union to support you during a recession?

According to J.D. Power’s 2022 U.S. Retail Banking Study, customers value and are more loyal to banks that deliver a meaningful customer experience and make the effort to support them in challenging economic times. In that report, 63% of customers said that if this kind of support is delivered by their financial institution, they “definitely will not switch banks, and 78% say they definitely will reuse their bank.” Financial institutions, according to J.D. Power, must use engaging methods to provide the support customers need most — especially when the economy is sour. This involves “a personalized mix of financial advice, hands-on help with problem resolution and guidance on how to grow their money.”3

Rivel, a data-driven management consulting firm, predicts that while a recession may slow overall banking activity in terms of new deposits and loan demand, consumers will still need key accounts and seek the flexibility that a bank or credit union can offer them, most likely from their current primary financial institution.4

Prioritizing Human Assistance in a Digital World

Human financial expertise is an important part of the mix when it comes to delivering a meaningful customer experience – particularly in challenging times like today. But getting the right balance of human-assisted support in place exactly when it is needed can be challenging in an environment that is increasingly more digital and self-serve.

Research by Citizens Bank suggests that despite the recent rapid adoption of digital banking tools, “human expertise (whether in-person or virtual) remains essential for consumers when it comes to getting financial advice and for more complex transactions.”5

The 2021 Citizens Bank Banking Experience Survey found that though “69% of consumers prefer banking online some or all of the time and 64% agree that technology will completely change banking as they know it, a similar number (65%) agree that they prefer human expertise when receiving financial advice.” This may feel like consumers are sending mixed messages, but in fact, what we see it signaling is simply a more nuanced and responsive approach to how consumers want to interact with banks — and how they expect to be supported.

Some of this means rethinking what support is. In some channels, support means enabling customers to serve themselves more efficiently. In other channels, support means the ability to access human assistance.

Optimized Channels Give Customers What They Want

Good customer engagement means providing ample access and support across all channels and letting customers choose what works for them at any given moment.

One way to think about this is as “opti-channel” versus “omnichannel.” An opti-channel model optimizes how information is presented and provided by channel; as opposed to providing all the information – in exactly the same format – across all channels.

Optimize how you service your customers, across all the different channels.

This model allows consumers to navigate their own experience and opt into channels that will best meet their needs and preferences. And for the financial institution, it necessitates they optimize all channels in order to cater to and serve the various ways different types of customers chose to engage.

Be mindful of the times
In times when rates are not competitive, ZAG Interactive – a website design and development company – predicts that consumers will need to look to other brand attributes to determine who they do business with. ZAG suggests that banks and credit unions consider and promote what other value they offer to their customers.

Be mindful of the times. If there is less disposable income to be had, ensure marketing materials such as customer communications and promotional messaging are sensitive to the current economic climate.

Three consumer trends that validate the importance of relationships:

  • Fewer consumers are sticking to a single primary financial institution (PFI)
    According to data from Rivel, only 65% of consumers prefer to use one bank, down from 79% three years ago. Consumers are not only diversifying their banks but also their accounts. According to Rivel, 57% of banking consumers are looking to add at least one new account in the next year, and 31% are looking to add two or more. If banks and credit unions want to keep those accounts consolidated with their institution, they will need to ensure that customers believe the benefits of expanding their portfolio with their current bank before they look elsewhere.6
  • Consumers are relocating
    COVID brought about a work-from-anywhere revolution that broke down geographic barriers. We saw significant migrations of people out of urban centers into the suburbs — with potentially significant impacts on banking. Rivel reports that as more consumers move away from their home branches, allowing them to bank fee-free will be important. We also see generational trends in terms of movement. According to Rivel, the #1 reason Gen Z consumers may give for leaving their current banking institution is a move to a new area.7
  • Consumers want to be met where they are — and that’s not (only) online
    As the pandemic continues to wane, there is less of an urgent need for isolation. Consumers are feeling more comfortable returning to public and physical settings and are therefore less reliant on digital-only solutions. Our technology partners predict that:
    • Reliance on digital-only solutions will continue to retract slightly. However, brands will still need to ensure consumers can find what they need digitally, including how to get help from an actual human when needed. ZAG advises that “This balance of today’s technology with a human touch is what consumers want in their busy but increasingly more social lives.”
    • Consumers are not ready to move totally online for their banking experience. Rivel research shows that 72% of consumers would not consider an online-only bank. This is essentially the same percentage as two years ago during the height of the pandemic.8
    • Customers want answers to be provided where and when they look — that is, in every channel they use. This means prioritizing both human-assisted and digital channels adequately. For example, according to Rivel research, over 40% of Gen Z and millennial customers prefer to have questions answered online, without having to talk directly to a human rep, yet overall only 14% of banking customers prefer chatbots as primary means of communications.9

Key Takeaways on the Current Banking Climate

  • Macro trends matter
    Banks and credit unions must contend with today’s rapidly evolving economic and geopolitical conditions as they look to stand out, compete, and grow.
  • Empathize with consumers
    Consumers are living in challenging times, too. Understanding and meeting those challenges will better position FI’s to meet the evolution of consumer banking and provide what consumers desire most.
  • Deeper engagement leads to a differentiated service
    Rapidly changing, challenging times mean FIs – especially the mid-tier CUs and community banks – must provide a deeper level of engagement. This entails the right balance of digital and human-assistance to differentiate themselves from the competition.

A Growing Focus on Customer Engagement 

Great relationships are built on trust. Creating trust is essential for financial institutions, and that trust starts with how customers interact with your institution. Customers need frictionless experiences that are easy, fast, consistent, convenient, and seamless.10

Customers have more ways than ever to interact with their financial institutions — which means leveraging technology can be a double-edged sword for FIs who must now ensure they are providing seamless consistent experiences across all these channels.

The brass ring here will be in sustaining a consistent pattern of positive experiences that build good customer engagement no matter where customers interact with the financial institution.

What is Customer Engagement?

You may be wondering why we are talking about the broader idea of customer engagement here instead of just customer experience. This is purposeful. That’s because Customer Engagement has a wider scope than customer experience — representing not just customer sentiment around one transaction, but the way customers interact with their FI across all experiences, in all channels, over time.

Customer Experience helps us better understand a single interaction, but Customer Engagement is about understanding and growing the entire relationship — translating to loyalty, retention, and trust. You may have 100 customer experiences that all go positively, but still struggle to win a customer’s full engagement. That’s why the broader lens is important.

Why Customer Engagement Matters for Banks and Credit Unions

Active customer engagement is foundational for the trust that banks and credit unions need to build with customers. That’s because trust and quality relationships lead to more profitable business and customer retention. Without good customer engagement, levels of trust are lower, relationships are weaker and customer loyalty is at risk.

This is a distinction that many banks and credit unions are still only beginning to fully contend with. In this survey, we asked banks and credit unions if they currently distinguish a difference between CX and CE. But only a third of institutions (33%) said they currently make this distinction. (Figure 4)

A chart from Engageware's Survey showing responses from banks and credit unions for the question Does your institution distinguish customer/member engagement from customer/member experience?
IS THERE A DISTINCTION?
Q: Does your institution distinguish customer/member engagement from customer/member experience?

Clear Opportunity for Banks and Credit Unions that Prioritize Customer Engagement

Ultimately, this represents an opportunity for banks and credit unions who are measuring CE and paying attention to the quality of their customer engagement. Those banks and credit unions will be ahead of the curve when it comes to attracting and keeping customers over the long term.

Here are some of the ways banks and credit unions told us how they differentiate customer experience from engagement:

“Experience is defined by one point in time/transaction. The engagement is determined by a series of experiences and penetration of products and services with hopes of being the primary financial institution.”
Operations Executive
Credit Union

“We measure engagement by how many products/services the member utilizes. Experience is measured by how satisfied, or unsatisfied, the member was while obtaining the product/service.”
VP of HR
Credit Union

“Currently moving from the mindset of member service to member experience – by taking an interaction and moving beyond just doing what the member requests to providing a level of service that exceeds expectations and creates a sense of loyalty on both sides of the interaction. Offering products/services and opportunities to educate the member to ensure their financial success…becomes important to provide this same level of commitment to our staff.”
HR Manager
Credit Union

Key Takeaways on Customer Engagement

  • Think beyond customer experience
    It’s not enough to only look at Customer Experience (CX) — or how customers feel about one specific transaction.
  • Consider all channels, over time
    Banks and credit unions must also consider Customer Engagement (CE) — how they work with their customers across all channels, over an extended period of time.
  • Customer Engagement is the key to deeper relationships
    It is Customer Engagement that builds and grows relationships and translates to loyalty, retention and trust.

Industry Insights for Customer Engagement in 2023

Rivel – data-driven management consulting firm

“With tight competition, and consumers’ propensity to switch institutions holding steady at 31%, banks and credit unions should cater to their existing customers as if they are brand new to their institution, constantly demonstrating what you have to offer them. Nearly 1 out of every 3 retail banking customers is likely to switch their primary bank to another institution in the next six months, so winning their business again and again because there is strong competition for their accounts.”11

Zag Interactive – website design and development company

“Each year consumers expect more from websites, so dated or frustrating sites will be negatively perceived, and potentially hurt brand loyalty. Consumers will have heightened demand for a simple, easy to use site that gets them where they want to be quickly. Sites that prioritize meaningful personalization will also win over consumers who want to feel like the experience is tailored to them, without being overtly intrusive. Brand loyalty will continue to be fragile so brands need to work hard to ensure that they consistently provide a positive customer experience.

The products and services offered by FIs should be highly relatable to the real lives, real goals and real needs of their customers. Brands that can get this right will have more engaged customers who also have increased brand trust.”

APC – customer experience market research and training company

“We expect 2023 to deliver more of the same to FI’s when it comes to customer experience. COVID forced customers who were otherwise disengaged from a digital standpoint to adopt even the most basic of services, such as remote deposit. That said, we expect the role a bank has as an advice center to only increase, though not in the traditional sense. Customers will remain in need of sound financial advice and banks need to be mindful of staffing advice-driven employees versus those who support a transactional experience. Branches and the FI’s CX strategy need to become more digitally focused, including when it comes to being an advice hub. Much like the Apple Genius Bar experience, banks need to facilitate the same hands-on digital environment within the four walls of a branch. Finally, power needs to be put in the hands of the customer. Banks must consider the tools their customers want (not simply what’s popular) and provide customers the gift of choice to interact with the bank and their money when they want, how they want, and where they want.”

SLD – Brand and consumer experience agency

Pursuing stronger customer engagement in 2023 will require financial institutions to realign their offerings, restructure their physical channels, reduce their operating costs and retrain their workforce.

Realign. Banks will need to shift from their traditional model of product selling to solution selling in order to meet the emotional needs of their customers. Open banking will put greater pressure on banks to focus on meeting the emotional needs of customers who are looking for strong advice and solutions that remove financial anxieties. The employee engagement model will align towards a consultative experience and away from primarily being transactional.

Restructure. With a shift to digital banking, institutions are restructuring their physical channels while reviewing their role in driving growth. Banks are starting to explore new branch business models, moving from transactions towards an advice-centric ecosystem where transactions are moved to newer and more personalized in-branch technologies. Banks are rethinking their staffing hiring and training model to attract, retain and train associates that are advice and empathy-focused.

Reduce. Financial institutions will continue to accelerate removing friction points through the use of technology in addition to helping reduce operating costs. The introduction of video ATMs a decade ago will continue with newer, smarter and highly integrated platforms being introduced that will allow for customers to open accounts, print new debit or even credit cards without the use of a live attendant.

In addition, digital banking will continue to focus on becoming seamless and easier for customers to not only do their day-to-day banking but also provide a more holistic view of their financial lives through APIs that integrated customers smart phones and other apps. FIs will continue to focus on fine-tuning the customer banking journey to focus on reducing the number of barriers and steps required as part of every aspect of banking, such as the introduction of self-check-in kiosks.

Retrain. The shift from transaction to advice selling has not been smooth for FIs for a wide range of reasons and 2023 will see greater importance on hiring and training.

Financial institutions have shifted towards universal bankers with limited success due to a lack of training, effective on-boarding of customers in addition to the wrong type of banker profile engaging with customers. 2023 will witness FIs putting greater importance on humanizing the banking experience for customers through better trained employees across all brand touch points.

In addition, with the challenges currently facing FIs hiring practices with fewer candidates, they will put greater importance on their value proposition and recruitment programs, ushering in a more inclusive and transparent approach to hiring. Retrain will not be limited to front line employees as executives and management at all levels need to embrace new agile and nimble approaches to business. As part of this new retraining, expect to see the growth of importance of behavioral economics and the ability to nudge customers towards greater brand loyalty.12

Consumer Perspectives: Gaps in Channel Usage Present Opportunity to Strengthen Engagement 

Overall, consumers’ perspective on their banking experiences is positive. However, there are gaps where consumer engagement could be much stronger, especially when it comes to the convergence of physical and digital services in the branch.

The consumer portion of this research was new this year and provided us with important insights that complemented the perspective of banking professionals. For this research, we surveyed 451 U.S. banking customers, aged 18-65, who use online banking for their checking or savings accounts.

Graphic showing the demographic information for the consumers surveyed in Engageware's annual survey.
SURVEY OF BANKING CONSUMERS

Overall, consumers’ perspective on their banking experiences is positive. However, there are gaps where consumer engagement could be much stronger, especially when it comes to the convergence of physical and digital services in the branch.

Overall, Satisfaction is High

First, the good news. More than two-thirds (78%) of consumers are satisfied with their current financial institution. In fact, 38% say they are very satisfied, where 16% reported feeling neutral and only 6% of consumers reported feeling somewhat or very dissatisfied with the level of support they receive from their primary bank. (Figure 6)

A chart from Engageware's Survey showing responses from consumers for the question How satisfied are you with the level of support you receive from your primary bank?
SATISFYING SUPPORT
Q: How satisfied are you with the level of support you receive from your primary bank?

Engagement, However, is Lagging

Looking deeper, the news is less rosy. Only 54% of consumers agreed that their bank tries to engage with them to understand their needs (Figure 7), and even fewer (43%) say there is someone at their bank or credit union they always talk to when they need answers to financial questions. (Figure 8) Personal connection and human trust are still largely missing — which implies that consumer satisfaction may be resting on more shallow ground than most FIs would like.

A chart from Engageware's Survey showing responses from consumers for the question My bank/CU tries to engage with me to understand and meet my needs.
MEETING MY NEEDS
Q: My bank/CU tries to engage with me to understand and meet my needs.
A chart from Engageware's Survey showing responses from consumers for the question There is someone at my bank/CU that I can always talk to when I need financial help.
GET PERSONAL
Q: There is someone at my bank/CU that I can always talk to when I need financial help.

Digital Channels Continue to Dominate the Volume of Interactions

As banks and credit unions seek to build this trust, where will they find their consumers? Our research shows that increasingly consumers will be using digital or hybrid channels. In the day-to-day, most customers are using digital banking — with 73% using mobile banking apps and 68% logging into online banking or visiting the website for their banking needs. Continuing the self-service trend, the next most utilized channel is an ATM or kiosk — which is used daily or weekly by 39% of consumers, and monthly by another 23%.

Less common channels used on a daily/weekly basis include drive-thru banking (18%), walk-in banking (11%), online or virtual chat (11%), in-person appointments (8%), and video banking (8%). (Figure 9)

A chart from Engageware's Survey showing responses from consumers for the question How often do you interact with your primary bank/credit union using the channels listed?
CHANNEL INTERACTION FREQUENCY
Q: How often do you interact with your primary bank/credit union using the channels listed?

Digital Channel Preferences Vary by Age Group

These numbers did vary somewhat by age cohort, with Generation Z being especially likely to prioritize a mobile app as their #1 feature (61%), while Baby Boomers showed the most interest in the website (28%) or going into a branch (24%) as their number one priority. However, when we looked at the top three ranked features by generation, all age groups showed high interest in some form of digital channel. (Figure 10)

A chart from Engageware's Survey showing responses from consumers for the section asking them to rank banking channels channels in order of preference.
CHANNELS RANKED IN TOP 3 BY AGE
Q: Please rank the following channels in order of preference.

What Does the Emphasis on Digital Mean for Branches?

Does this continued shift to digital mean the branch is dead? Not necessarily. What is hidden in those numbers is the complexity and importance of the kinds of interactions that take place in each channel. There has been an evolution away from branches, but it is mostly around common banking transactions. The bulk of app or web transactions, for example, tend to be things like balance inquiries and transfers between accounts. Conversely, the bulk of in-person appointments tend to be those which require more guidance or support — including high-value, human-assisted interactions like loan applications and financial wellness advice.

We know that when consumers are dealing with these big financial events or decisions, they are more likely to seek the channels that provide human interaction — and it is in these moments where the greatest opportunity for relationship building exists.

Banks and credit unions that provide a low friction way to engage those channels through technologies (like online appointment scheduling and video banking) will have the advantage.

The Power of Integrating Human Assisted and Digital Channels

We also know that at least some utilization of human-assisted channels can contribute to banking customer engagement and feelings of connection.

In fact, our research has found that customers who use human-assisted channels in addition to their web or app channels are much more likely to agree that their bank or credit union tries to engage with them to better understand and meet individual needs (63% vs 38% agreement). Those who use human-assisted channels were also much more likely to agree that there is someone at their bank or credit union that they always go to whenever they need advice or answers to financial questions (56% vs 21% agreement). (Figure 11)

A chart from Engageware's Survey comparing responses from consumers based on their usage of human assisted channels for the prompts: My bank or credit union tries to engage with me to better understand and meet my individual needs. and There is someone at my bank or credit union that I always go to whenever I need advice or answers to financial  questions.
EFFECT OF HUMAN-ASSISTED CHANNELS ON ENGAGEMENT

Q: My bank or credit union tries to engage
with me to better understand and meet my
individual needs.

Q: There is someone at my bank or credit union that I always go to whenever I need advice or answers to financial questions.

The Winning Formula: Balancing Digital and Human Assistance.

What does all of this mean for your bank or credit union? The majority of today’s banking interactions are taking place digitally. As a result, most consumers lack that personal relationship with their primary financial institution that could help to build trust and loyalty. But just because a channel is digital doesn’t mean it can’t have that human touch. There is a real opportunity for banks to differentiate themselves and build customer engagement by providing access to human assistance through their digital channels — such as live chat for basic questions, and video banking, and online appointments for more personalized experience and consultative support.

We know that when consumers are dealing with big financial events or decisions, they are more likely to seek the channels that provide human interaction — and it is in these moments where the greatest opportunity for relationship building exists.

“What happened during COVID is that we realized these two channels [digital +physical] need each other… Customers want the best of both worlds. They want the branch [as long as their design & employees] meet the customers’ needs.” 13
Stephen K. Griffin, SVP & Director, Retail Distribution Planning Group
Regions

Key Takeaways from Consumer Perspectives

  • High-volume, basic transactions are digital self-service
    On a day-to-day basis, customers are most likely to interact with their bank or credit union through digital self-service. Almost three-quarters use their mobile banking app at least weekly, while two-thirds access their account through the financial institution’s website. We can assume that the majority of these are for basic transactions, such as checking balances, funds transfer, mobile deposit, etc.

    Yet, digital is often the first place consumers turn when they have more complex needs or questions. More often than not, consumers will begin their journey by referring to their bank or credit union’s website or mobile app, even if for basic contact info or FAQs to help inform their next step. For this reason, alone, banks and credit unions should ensure they are providing ways for the consumer to easily connect to get the human-assistance they need.
  • Opportunity exists in less frequent in-person interactions
    The survey of banking consumers validates that the banking methods that require in-person interaction are infrequent. Only 8% of consumers visit the branch to speak to a person on a daily or weekly basis. The waning use of human-assisted channels may be taking a toll on engagement — as only about half of consumers believe their financial institution tries to engage them or that they have someone to turn to with questions. This represents an opportunity for banks to better deliver and encourage usage of their appointment scheduling and video banking capabilities.
  • Connect self-service to human-assisted channels
    Banking consumers will likely best respond to an opti-channel approach that meets every customer demographic where they are. The key will be to bolster self-service digital channels with opportunities to quickly connect to human-assisted support when and where needed.

Bank and Credit Union Perspectives: Staffing, Digital Adoption Affect Customer Engagement

For banking professionals, as with consumers, the shift to digital channels is still top of mind — though it is by no means the only concern. Banks and credit unions are struggling to maintain engagement and understand how to adequately allocate resources while supporting digital and human-assisted channels. Another area of concern is staffing challenges — which have a very real impact on the provision of high-quality consumer support and delivery of expert financial guidance.

When it came to our survey of mid-tier banks and credit unions we wanted to explore the trends and perceptions of customer engagement in the financial services industry and also understand what has changed in their perceptions and practices since this time last year. For this research, we surveyed 114 employees of U.S. retail banks or credit unions with at least five locations, in the role of COO, CEO, VP, Director, or Manager.

Graphic showing the demographic information for the banks and credit unions surveyed in Engageware's annual survey.
SURVEY OF FINANCIAL INSTITUTIONS

The pivot to digital is permanent but focus is growing on branch and contact center

A shift to digital banking utilization and provision of services was already well underway prior to the pandemic, but banking was lagging behind many other industries. When the industry pivoted to online and mobile services during the pandemic, it was clear to everyone that the shift would likely be permanent for many consumers. This year’s data bears that out.

That said, self-service digital has not completely eclipsed in-person branch or call center activity. When we asked banks and credit unions where their top priorities were in 2023, 43% said their focus was on digital. Nearly one in three (29%) said branches were a priority, and 28% said their contact centers were the place they were looking to, first. (Figure 13) This shows that while digital is important, it is not at all the only focus.

In fact, when compared to last year14, digital is still just as important but now the branch and contact center have become much bigger priorities than last year.

A chart from Engageware's Survey showing responses from banks and credit unions in 2021 vs. 2022 for which channels are their top priority.
OVERALL CHANNEL PRIORITY
Q: When it comes to customer engagement, which “channels” are your organization’s top priorities?

Customer Engagement Priorities for Digital Channels

What kinds of digital channel priorities will banks and credit unions be focused on? Now that many institutions have done the work of putting digital infrastructure in place, their most common focus will be on adoption and support. More than half (53%) of those surveyed counted adoption among their top priorities, and 51% included the provision of resources and support in those digital channels. Another 48% will be looking to improve their mobile apps, specifically. (Figure 14)

A chart from Engageware's Survey showing responses from banks and credit unions in 2021 vs 2022 for the question When it comes to building strong customer engagement through DIGITAL channels, what are your top 3 priorities for next year?
TOP DIGITAL CHANNEL PRIORITIES
Q: When it comes to building strong customer engagement through DIGITAL channels, what are your top 3 priorities for next year?

Similarly, digital improvements top the list of priorities as they determine CE investments for 2023. One in three (30%) respondents said their bank or credit union is planning an investment into digital improvements in order to deliver on customer/member engagement in 2023. Importantly, investments into relationship banking and financial wellness, and physical branch investments such as ATMs/ITMs are increasingly important. (Figure 15)

A chart from Engageware's Survey showing responses from banks and credit unions for the question What investment(s) is your bank/CU making into customer/member engagement in 2023?
TOP CUSTOMER/MEMBER ENGAGEMENT INVESTMENTS
Q: What investment(s) is your bank/CU making into customer/member engagement in 2023?
Staffing and training continues to take center stage

Another major theme of this year’s data was staffing. A focus on staffing is certainly not unique to the banking industry — most industries are seeing a talent squeeze that is bringing attention not only to hiring and retention, but also to training and development.

In banking, there is also a clear connection between staffing and customer engagement that is top of mind. More than half of the banks and credit unions surveyed told us that in order to deliver strong customer engagement, the #1 thing their institutions were in need of was staff. This was more than double the next (related) item they said they needed — time (20%) — and more than triple their desire for executive support (14%). This represents a 66% year-over-year growth from when we asked this question in 2021.15 (Figure 16)

A chart from Engageware's Survey showing responses from banks and credit unions for the question When it comes to resources needed to deliver strong customer engagement, which is your institution most in need of?
CUSTOMER ENGAGEMENT RESOURCES NEEDED
Q: When it comes to resources needed to deliver strong customer engagement, which is your institution most in need of?

Customer Engagement Priorities for the Contact Center

When we asked banks and credit unions what they would be focusing on at the call center, staffing was a big theme — either in terms of productivity and the improvement of service levels (58%) or in terms of training and staff development (50%) or simply hanging on to staffers (48%). (Figure 17)

A chart from Engageware's Survey showing responses from banks and credit unions in 2021 vs 2022 for the question what are your top 3 contact center priorities for next year?
TOP CONTACT CENTER PRIORITIES
Q: When it comes to building strong customer engagement through the CONTACT CENTER channel, what are your top 3 priorities for next year?

Customer Engagement Priorities for the Branch

At the physical branch level, staffing is also far and away the most common area FIs are focusing — with 68% of banking professionals surveyed saying they will be prioritizing training and staff development, and 44% saying they will be working to ensure appropriate staffing levels. (Figure 18)

A chart from Engageware's Survey showing responses from banks and credit unions in 2021 vs 2022 for the question what are your top 3 physical branch priorities for next year
TOP BRANCH PRIORITIES
Q: When it comes to building strong customer engagement through the PHYSICAL BRANCHES, what are your top 3 priorities for next year?

In Their Own Words: How banks & CUs plan to invest in customer engagement for 2023:

“[We’re] rolling out a plan in branches for developing 1-to-1 relationships with customers… looking at the total relationship with the customer.”
VP Branch Retail Ops
$1.5B Credit Union

“[We plan to have] more unified/integrated technology solutions for our teams to better engage with members.”
Manager of Branch Retail Ops
$1.5B Credit Union

“[Investing in] more training [to become] more consultative in branches.”
HR Executive
$1.5B Retail Bank

“Tools and technology to gather relevant data to help users engage with our members on a more personal level.”
VP of Strategy
$500M Credit Union

Key Takeaways on Financial Institution Perspectives

  • Digital channels still the priority, but branch and contact center seeing stronger focus
    Self-service digital is the top priority for banks and credit unions — especially when it comes to customer engagement. As banks and credit unions look to next year, digital topped the list of priorities — similar to last year. However, this coming year, FIs have a stronger focus on the branch and contact center — both people-oriented channels.
  • Digital channel improvements to drive adoption
    Digital channel priorities are focused largely on adoption and support, including the provision of resources and support in digital channels, and improving mobile apps.
  • Banks and credit unions investing in relationship-building capabilities
    While digital improvements top the list of priorities as banks and credit unions allocate resources for 2023, there is a definitive trend indicating investments in relationship building capabilities. This includes investments into programs and data-informed technology to support relationship banking and financial wellness, as well as physical branch investments such as ITMs, banking by appointment, and physical enhancements to turn the branch into advice centers.
  • Clear connection between staffing and customer engagement
    Staffing was the other major theme of this year’s data, where FIs are making a clear connection between staffing and customer engagement — in branches, call centers, and over digital channels. The focus on staffing saw a 66% year-over-year growth from when we asked this question in 2021.

Preparing for 2023: Key Observations and Recommendations

Banks and credit unions span diverse geographies and serve unique consumer demographics. Each institution possesses its own set of goals, strategic priorities, challenges, and opportunities. Thus, there is no single strategy or recommendation that will apply to all.

Key Observations for 2023:

That said, today’s mid-sized financial institutions are all facing the same broader market conditions. The rise of digital, increasingly competitive financial and employee markets and changing consumer expectations impact all. When we step back and look at the results of this research – there were three key themes that appeared.

Staffing: FIs must solve challenges in hiring, retention, and training
  • Banks and credit unions see staffing as a critical resource for building strong customer engagement and identify it as their #1 resource need. Staffing was a top issue for contact centers — including improving service levels, training and development, and retention.

    Staffing is also informing priorities for branches— including training and development, planning staffing levels, and driving 1:1 personal relationships with customers.
Opti-channel: FIs must support members in their channels of choice
  • As customers increasingly invest in digital channels, and FIs are strapped for staff, a critical part of winning and keeping customers will be supporting their ability to choose their own channels and still have a consistent experience.

    Some customer and transaction needs will be solved easily through self-service. According to Rivel data, 62% of consumers want to do common transactions with web or mobile banking. Others will require human support. That same Rivel data shows that 57% of consumers prefer human assistance for more important transactions.16

    In between those two options, FIs will need to create solid, frictionless hand-offs and transitions that provide continuity in the customer experience and inspire long-term engagement.
Digital Adoption: FIs must build adoption and digital support for long-term technology success
  • Digital is still a top priority for FIs, but the focus is shifting from implementation to driving adoption and providing resources and support across key channels — whether website, mobile app, ITM, chat, video, appointment scheduling, lobby management and more.

    With today’s advanced technology, it’s easy to feel like AI can solve any problem. However, banking customers are humans, and will always require a human touch — especially for their most high-value or critical transactions. Digital alone cannot solve the challenges. Banking needs a human component.

    As adoption soared during the pandemic, FIs discovered the hard way that even the best digital is not a silver bullet that can solve all problems, alone. According to Rivel data, 72% of consumers would not consider a digital-only bank.17 Consumers’ needs and desires will vary and people will still need your help. This will involve: finding the right digital balance, across adoption, research, support & service.

Four Recommendations for 2023 Planning 

How do these findings influence customer engagement strategy for 2023 and beyond? As we reflect on the learnings from the annual survey and the three key observations, it is clear that customer engagement is a non-negotiable. Consider these 4 actionable ways to begin addressing it.

The staffing challenges that continue to persist for banks and credit unions will not be resolved overnight; they are likely to carry over as a key challenge in 2023. Banks and credit unions must find ways to empower both their customers and employees to be more efficient. Essentially — to do more with less. This means reducing the high-volume calls, driving more digital adoption, and quickly connecting customers who need personalized support or service to the right resource, at the right time, in the channel of their choice.

Here are four ways banks and credit unions can help navigate an uncertain market, meet their growth goals, keep up with ever-changing consumer needs, and mitigate the current staffing challenges:

1. Surround customers with access to information
  • Consider an opti-channel approach that gives customers access to support, product, and service information across your website and mobile applications on their own terms. Be sure you have the resources in place to meet customers where they are and provide the support they are most comfortable with.

    Want to learn more about surrounding customers with access to information and enabling them to self-serve? Check out this blog post for three ways >
2. Route customers to the right channel
  • Connect customers quickly to the right channel when human assistance is needed. Helping customers transition easily from digital to human-assisted support will be critical to building their engagement and winning loyalty. Be sure you leverage tools such as live chat for common questions, and video banking and appointment scheduling when more personalized support and service is needed.

    Appointment scheduling is the perfect way to connect customers to the right person regardless of the channel. Learn how appointment scheduling can benefit your organization >
3. Empower staff to be digital advocates
  • Most digitally savvy customers are already using your digital tools, so your focus will be on building adoption among digital laggards. Your staff is the key to building awareness of digital tools, as well as improving confidence and adoption. Give employees the resources they need to introduce and support your digital tools. This will lift some of the support burden from your staff, while driving more digital adoption.

    Gaining adoption of digital banking tools is a challenge for many financial institutions. Learn how to use your staff to increase digital banking adoption >
4. Provide employees with easy access to information
  • One of the top employee challenges observed in the field is difficulty locating and utilizing the day-to-day information they need to do their jobs. Ensure your institution sets employees up for success by providing them with access to accurate, up-to-date, and consistent knowledge which they can access seamlessly at any given point in their workflow.

    Want to learn more about providing employees with easy access to information and enabling them to self-serve? Check out this blog post for two ways >

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Attract, serve and grow customers

Engageware provides 400+ financial institutions with the customer engagement solutions they need to drive growth, efficiency, and a better experience for both customers and employees.

  • Help customers quickly get support and product answers on their own.
  • Connect customers to the right resource when they need expertise.
  • Empower employees with accurate and consistent answers to help customers.

Interested in learning more about Engageware’s solutions? Book a meeting with one of our experts!