– By James Harvey
Across the world, consumers are increasingly relying on digital and mobile banking to manage their finances. The latest research from Cisco, The App Attention Index 2023: Beware the Application Generation, reveals that use of banking and insurance applications has risen over the last two years, in contrast to most other sectors where there has been a marginal drop off since the height of the pandemic.
The study also highlights the growing expectations people now have around digital experience and their complete lack of tolerance for applications that don’t perform as they should. Consumers are becoming increasingly fed up with bad digital experiences, to the extent that significant numbers are now reverting to engaging with brands through traditional channels.
These shifts in consumer attitudes and behaviors are most pronounced within a new cohort of young consumers, aged 18-34, which is emerging across the world, The Application Generation. They relied on applications to get through the pandemic – for their education, to begin and progress their careers, and to stay connected to friends – and now they’re deploying them with great skill to live and thrive in a hybrid world. Indeed, they are heavier users of digital banking and insurance services, more than other consumers. 92% use at least one banking application per month and. And on average, three on a regular basis.
Crucially, The Application Generation are significantly more discerning about the quality of the applications they use, and they’re constantly evaluating the relevance – or otherwise – of digital services. They’re mindful about their use of digital services and think hard before downloading new applications. They’re actively looking to rid themselves of a sense of ‘application clutter’ that has built up over recent years. They want every digital experience to add value to their lives, and they pride themselves on only using the very best applications.
However, 72% of the Application Generation report they have encountered problems when using banking applications over the past 12 months and, as a result, as many as 27% claim they are now moving away from digital banking services and applications and favoring other channels such as branches and contact centers.
For banks looking to streamline operations and reduce the burden on resource-heavy contact centers and branches, this potential shift away from digital services towards more costly channels represents a profound risk. To avoid an exodus away from their applications, banks urgently need to ensure that they are delivering the seamless and secure digital experiences that the Application Generation are now demanding. Otherwise, they risk alienating huge numbers of young consumers around the world.
Applications are playing a critical role in the cost-of-living crisis
Over the last 10 years, applications and digital services have changed the way people all over the world carry out their banking activities. People have become more engaged with managing their money, favoring the speed, ease, and convenience that digital services offer over traditional channels.
And in the current cost of living crisis, this appetite for digital services has skyrocketed, with many people relying on applications to manage their budgets and make their money stretch further. This is particularly true within the Application Generation, with 90% of young consumers claiming that they are relying on digital services more as a result of the cost-of-living crisis, and 63% stating that applications are hugely important in managing their personal finances.
Poor digital experiences are making the Application Generation question the value of applications
With applications playing such a vital role for billions of consumers around the world, the stakes around digital experience have risen to a new level. People are already feeling the strain of squeezed budgets and ongoing financial pressures, so they simply don’t have the time or patience to put up with poorly performing applications. 62% of consumers report that their expectations for digital experiences are far higher than they were two years ago, and 64% state that they are less forgiving of poor digital experiences than they were just 12 months ago.
In the current environment, people feel disrespected by brands whose applications don’t deliver an exceptional digital experience as standard. And as a result, they’re looking for retribution – deleting applications and switching to alternatives and sharing their negative stories far and wide.
Of course, when it comes to banking and insurance, people generally don’t have the option of simply deleting the offending application and finding an alternative. They’re locked into a relationship with their bank or insurer, and going elsewhere can involve a lengthy and complex process. And so, consumers find application performance issues in these circumstances even more infuriating because they know that they’re stuck with the brand in question.
However, rather than simply accepting bad digital experiences, and waiting for their banking applications to start working properly again, people are increasingly willing to revert to other channels. The research highlights how poor digital experiences are making people want to go back to face-to-face and phone interactions with brands, and how consumers are feeling far more empowered to use alternative channels such as face to face or phone to contact and engage with brands than they did just 12 months ago.
Digital disruption now poses a severe threat to banks
Given this shift in consumer sentiment, it’s alarming to see that so many consumers have experienced performance issues when using banking and insurance applications over the last 12 months. And this goes a long way to explaining why more than a quarter of young consumers claim that they are ditching applications and going back to branches and phone calls to carry out their banking tasks.
For banks and insurance companies, this could have serious consequences. For a start, a surge of customers away from digital services can quickly lead to overwhelming demand on branches and contact centers. And this would mean disgruntled customers, already fed up having encountered a poor digital experience, would then endure an equally unsatisfactory “analog” experience. There are also major cost implications of any trend away from digital services, which are significantly cheaper to operate than contact centers and branches.
Application observability is key to maintain customers on digital services
Banks can’t afford to deliver anything less than the intuitive, seamless, and secure digital experiences that customers, and particularly the Application Generation, now expect as standard. And this means equipping their IT teams with the tools and insights required to optimize application availability, performance, and security at all times.
It’s therefore imperative that banks implement application observability, to enable IT teams to rapidly detect and resolve application availability, performance, and security issues. With application observability, teams can correlate application data with key business metrics, to identify and prioritize issues which pose the biggest threat to customer experience.
The shift to digital and mobile banking over the last 10 years has been one of the great success stories of the banking industry. But there’s now a real danger that this will start to be undone if application performance fails to keep pace with soaring consumer expectations for exceptional digital experiences. With application observability, banks can keep customers engaged and happy using their digital services and reduce demand on those traditional (and more inefficient) channels.
(James Harvey is the CTO Advisor EMEA, at Cisco Observability.)
(Disclaimer: Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited.)
