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Dec 4, 2020

Summary: On this episode, DN's Simon Powley interviews guest Peter Wannemacher a Principal Analyst at Forrester Research. They discuss what they think the banking industry can learn from the retail industry to help support branch banking.


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Simon Powley (00:15):

Well, hello, everyone. Thanks so much for joining us today for another edition of COMMERCE NOW. I'm excited to be sitting on the opposite side of the mic today, hosting this, along with our returning guest, Peter Wannemacher from Forrester Research. Welcome, Peter, and thanks so much for joining me today.

Peter Wannemacher (00:33):

Thank you very much. Good to be here and thank you for having me.

Simon Powley (00:36):

Well, listen, yeah, we're glad to have you on today. You and I were talking I guess a couple weeks ago now, post-COVID and the impact of the industries, and really enjoyed the conversation. It was kind of a warm-up, I think, to today. But what I really found intriguing was really the talk about the parallels between banking and retail.

Simon Powley (00:58):

I kind of told you a little bit about my perspective of working for large FIs in the past that we had called our branches. Now they're called financial centers, but in the past, they really were even moved around and called them stores. There were times that we really focused on hiring retail folks, and then didn't. So it seems like it's kind of ebb and flowed.

Simon Powley (01:20):

But lately, I haven't really heard much about people learning as much from retail or the parallels of retail banking with a traditional retail network. And I think you and I both think there's something there. So talk to me a little bit about what you think the banking industry, how they underestimate retail, and maybe what can be learned from the retail industry to help support branch banking.

Peter Wannemacher (01:45):

Yeah, so I definitely agree with you that there's a lot there and there's a lot to learn from retailers, in some cases directly from, right? I mean, there are some big banks that have hired from... I won't name names, but there are some big banks that have hired from retailers or from related, right? So media companies like Disney, travel companies that have been successful like JetBlue. We've seen some hires at executive and strategy roles that have been successful. But they, as you sort of... I think you said it pretty explicitly, but you at the very least implied it's still more limited than I think it ought to be. Or maybe to put that another way, banks could do even more to yes, maybe hire from retail, but more importantly, to learn from retail.

Peter Wannemacher (02:30):

One way to think about this is... We, Forrester, wrote a report called What Banks Can Learn From Retailers, and it was almost exactly five years ago. For the purposes of our conversation, we can call it five years. When I went through, there were nine pieces of advice we had in there. And there were a couple that banks have improved, like cross-channel design. I think there's still a lot of work that could be done there, but there's a fair amount.

Peter Wannemacher (02:56):

When you think about how many banks now offer... I mean, in the time of COVID, the demand has decreased significantly, but there are still times when someone wants to go into a branch or have a conversation or have a video call or have a phone call, and navigating the move from a mobile device or a PC-based website to that other channel, that human channel or touch point within that channel is one that I've seen some progress on, some real progress.

Peter Wannemacher (03:25):

There are lots of others though, things that will... I'm sure we'll get into in this conversation, but things like search, notifications, even just how they think about the positioning of products. The nature of products is different in retail than is in banking, and that's going to remain true for the foreseeable future and probably forever. But the thinking about how you position products and how you design for product shopping, there's still a ton to learn from retailers for bank executives and managers.

Simon Powley (03:53):

Yeah, I love that. Yeah, you're bringing back fond memories from my past Disney efforts around onstage versus offstage behavior in the branch. Or the Ritz-Carlton approach of the morning huddle, and how to properly execute that to ensure that you're prepared for that sort of things.

Simon Powley (04:12):

But I'm fascinated. Let's do talk about positioning of products, because I've thought about this through the years. It's very different to walk into something, call it a Walgreens or an Apple store, and have a product display, pick it up, play with it, touch it, have someone describe it to you in such a way that it's useful. And then having to talk about how to position a bank product differently, if I'm understanding you. So tell me a little bit more about that positioning of products, because I think that's something that will continue to be a challenge as the landscape continues to evolve for branches. And I think it is something they can take away from retail.

Peter Wannemacher (04:48):

Yeah, so just to be clear, I'm thinking about the conceptual positioning, not so much the physical positioning in a branch, for example, or if a bank calls it a store. There is something... I mean, I want to spend most of our time today talking about the things banks can learn from retailers, but we should sort of have in the back of our heads the whole time that there are some genuine differences. Some ones that should adjust how you, if you're listening to this and you're a bank executive or someone working with a bank executive, and one of them is...

Peter Wannemacher (05:17):

I mean, the reason why there are stores, physical stores in retail is very different and always has been than the reason that there are branches for banks. That's noteworthy. I mean, there has never been... Even the few physical elements of banking, like a debit card or a physical credit card, no one ever goes into a branch and sort of flips through their credit card to choose which one they want. That's just not how it works. So that distinction is important as we think of that.

Peter Wannemacher (05:45):

But to go right back to your question. So our advice five years ago to banks... And as I said, when you look at our advice, some of the banks really have taken it to heart. I don't want to make this all about the negative. But I think you and I and our listeners care a lot more about what the work is now than kudos, well done by some leaders in the past five years. I'm going to focus on that.

Peter Wannemacher (06:05):

So one of our pieces of advice was base merchandising on user needs, not product silos. Which in some sense is yeah, I mean, we've heard that before. But if you look at banks' websites and mobile apps and mobile sites, right? Or responsive. Whatever they use, and most of them use multiple channels and touch points. Well, so in retail, they've done a good job of helping customers explore based on what they want, right?

Peter Wannemacher (06:33):

There's some really specific examples of this. If you look at J.Crew, what they do... And they've done and they've continued to do this, and Sephora does this really well is, "What are you looking for?" You probably don't care how we think about our product selections or categories. We care about how you're looking for it. And that includes some specific... So microsites around winter storms are coming for J.Crew, and so let's take you to our best jackets and stuff like that, right? Which ultimately, it's just outerwear, but they're thinking about it from the mental model of the customer, right?

Peter Wannemacher (07:06):

Or Walmart does this really well, both in store and online. They're actually better than most online. About average for in store from what I've seen in our research. At back to school, right? Back to school meant something different in 2020, sadly. But there is still such a thing as school, and hopefully there will be again something that looks like what it used to be.

Simon Powley (07:23):


Peter Wannemacher (07:24):

So they did a much better job. If you look at banks... And back to school, banks occasionally have something around that. But the big thing in banking is life events, big milestones that happen in people's lives and are the number one catalyst for people looking for a financial product. And yet, if you look at the average banks... Not just the average. If you look at the overwhelming share of banks' websites, and apps, and mobile sites, and I think branches, but I'm not as knowledgeable about that, they are not... The organizing principle of that positioning is almost never what's happening in that person's life that they might need X product.

Peter Wannemacher (08:05):

You see a little bit of it. I'll give a quick example here. TD does this. So I want to give a little bit of kudos to TD. They do this. But it's buried, right? It is not the primary organizing principle. It's not the main way you find what you need as a customer or prospect. It is secondary.

Peter Wannemacher (08:19):

And this doesn't need to be totally reorg... Especially in digital spaces. You don't need to totally rearrange everything, right? I understand why you want to let people, if they know they want to get a credit card, do a scroll over and look at all the credit cards, right? I don't think you have to abandon that traditional positioning in merchandising to allow people to weigh in to other options, right? Things where...

Peter Wannemacher (08:42):

And this is what, again, you could look at based on life events. I'm moving. What are all the things I might need? Or what we've seen, and I think you and I have talked about before, guided product recommendations, where a customer answers a couple of questions and then is provided proactively and in a personalized way with some suggestions, right? So I'm answering a few questions about who I am and what's going on in my life, or just what I need financially, and you, the bank, provide me with. And there's a large share of people, somewhere between 30% and 45% of most banks' customers that prefer this kind of method for finding what they need. So banks really fall short there. Does that make sense?

Simon Powley (09:19):

It does entirely. Yeah, no, that's very interesting. I'd agree with you. I think those life events are key. I think from a sales process, there's no question. I think the financial institutions are focused on it, but their execution or ability to dive in that the way some other retailers is more challenged, if I'm understanding you correctly. I think you're spot on there.

Simon Powley (09:37):

I think about the marketing that can be done through social media or those kind of things for retailers. My understanding, and you may have a better understanding of this probably do than I do, is they can really take data and analyze how much time you're looking at a particular product or service to help determine and target things for you in the future. Are those some of the lessons is how to leverage big data and analysis and those kind of things a part of how banks can also do that? Or what advice would you have around the digital capabilities a little bit more?

Peter Wannemacher (10:11):

Yes, and you nailed it. It's the leverage or the making use of data. So banks have two big advantages here over retailers, which is they tend to have lots of data. I mean, more or less. It's hard to quantify. But they have lots of actionable data, especially for their existing customer. So I'm going to start by answering that. Prospects is a little bit different, and there is a creepiness risk that I'll talk about in just a second.

Simon Powley (10:31):

For sure, yeah.

Peter Wannemacher (10:32):

But people that you have a current relationship with, you have lots of data about them, and they're actually very comfortable. There are some exceptions. So you want to allow them to opt out. Some people's favorite personalization is no personalization. Remember that. But in general, if you have an existing relationship with them, they're quite happy for you to utilize that.

Peter Wannemacher (10:51):

We did this, I won't name names, but there was a big bank that we did some work with where they greeted everyone on their mobile app with, "Happy birthday" when it was their birthday, but nothing else. Not like, "Let's think about do you want to get your financial house in order because of your birthday?" Or even just maybe a perk, right? Maybe an offer, whatever it may be.

Peter Wannemacher (11:10):

Now, most people still aren't going to go for that, but they'd done nothing. And when we talked to them, it was because they were really worried that people would feel weird about that. And the answer is for the vast majority of people, if they have an existing relationship with you, right? If they've authenticated into your website or your app, no, that's good. Honestly, the reaction, when we did some research on this, was, "You should know it's my birthday. I have all my money with you. Of course you know that. That doesn't make me feel weird at all." There's a very small percentage that are going to opt out of something like that, and that's okay. And you want to be giving them, right? Firms like Chase and Capital One are doing a better job of giving people control over their data and opting out of things.

Peter Wannemacher (11:46):

But for the most part, so yes, you hit the nail on the head when you said it's about leveraging that data. So what retailers... Over a third of Amazon's sales, according to Amazon themself, come from product recommendations based on data about the customer's behavior. And that includes sometimes within search, by the way, which is something that banks should do better as well. So yeah, this is something that banks need to be leveraging better.

Peter Wannemacher (12:08):

Every bank I work with and every bank who I'm sure you and I both talk to has mountains of data. It's making use of that data. And there are some limitations, right? We understand there's some legal and compliance issues. But the vast majority of the issues is putting in place the backend data infrastructure to enable that, and then making good use of it on the front end to enable better... Yes, it might be marketing. It might be product recommendations, which are a form of marketing, but can be... If you take that mental model of what the customer needs, what might be happening in their life, it can feel like advice and valuable advice. So yes. Short answer is yes.

Simon Powley (12:44):

Yeah, no, interesting. And the personalization, we've talked a lot about that, that customers are looking for. And I think you're spot on. I mean, the information can be gathered from Amazon about... Because I'm on that site regularly, obviously, and love their frictionless journeys, and we should talk about that. But they don't have as much information that I have provided to them as my financial institution with KYC requirements.

Simon Powley (13:09):

So certainly, I've had to tell my bank, through obligation, personal stuff about me that Amazon may not know. They're having to pick it up. And banks-

Peter Wannemacher (13:18):

That's right. Yeah.

Simon Powley (13:18):

... do have that kind of big data where they can do the balance there to really personalize those needs and personalize my experience, which I know is very important to them.

Peter Wannemacher (13:26):

Yeah, and generally speaking, I mean, there is this sort of... There's a creepiness danger, and that banks should not [inaudible 00:13:31].

Simon Powley (13:32):

Yeah, talk about that before we go onto the next topic. Tell me about that, because I agree.

Peter Wannemacher (13:36):

Yeah. Well, for starters, when you're talking about... People talk a lot about banks being too siloed, and they're almost always right, right? I think they're always right, essentially. There is however... So if you think about the role you play in people's lives, I'm talking about not you personally, but the bank plays in people's lives. There is a clear distinction, more so than in almost any other industry, between someone who has an existing relationship with you and someone who doesn't. And unlike retail and lots of other industries, there's a pretty clear line there, right?

Peter Wannemacher (14:06):

In other words, am I a Target customer right now sitting at my house talking to you? I don't know. I go to Target sometimes, right? If I want to stop being a Target customer, I just don't go to Target ever again.

Peter Wannemacher (14:17):

If I want to stop being a Bank of America customer, let's assume I'm a Bank of America customer, I have to extricate myself from that relationship. There's an inherent stickiness to that, which has a lot of implications. But one it has is that it means that there is a clear distinction between a bank that I have a relationship with, and I may not love them, but I have a relationship with them, and one I don't.

Peter Wannemacher (14:38):

So executives and strategists of banks should absolutely... I want you to remove many of your silos. And I even want you to maybe get rid of the silo between dot com site and secure site. That's often the language that bank executives use. But I don't want you to lose sight of the mental model customers have of the role you play in their lives, which is very distinct between those two.

Peter Wannemacher (14:59):

So the risk of creepiness is pretty darn low when it comes to those existing customers. I mean, you could say something inappropriate, right? We could talk about... But it is not going to be... It was almost never just because you seem to know about them, that they're very comfortable. In contrast with the prospects. I think if you're a bank executive, you should essentially treat prospects as though they don't want to know that you know much about them, right? Maybe you let them opt in, right? You can say, "Hey, we can use your location to find the best rate for you for X product," which is sometimes necessary. But you want to be transparent and upfront, set expectations why we need this. Which involves some UX design choices that are really important.

Peter Wannemacher (15:41):

I mean, and there are other folks at Forrester that are much smarter than me about the privacy and creepiness questions. Folks like Fatemeh Khatibloo, who does brilliant research here. But in terms of for bank executives specifically, that's the sort of most important headline is-

Simon Powley (15:55):

Got it.

Peter Wannemacher (15:57):

It's not a silo, but it is a great wall between those two groups, and you should keep thinking about that as being a clear distinction.

Simon Powley (16:04):

Great. Yeah, I'd love to, at another time, talk a little bit about those relationships and more of the subscription model and how that affects the differences between an online provider and a bank. Because I think there's something there in terms of pricing and the way they do that. But we'll have to table that for another conversation.

Peter Wannemacher (16:22):

Yeah. Well, we can table it, but I will say yeah, I mean, we've done some research and people do think... I've had bank executives, understandably, say to me like, "Well, isn't the monthly fee basically a subscription?" In the eyes of customers, the answer is-

Simon Powley (16:35):


Peter Wannemacher (16:36):

... no.

Simon Powley (16:36):


Peter Wannemacher (16:37):

So yeah. And they pay for financial. Digit is a FinTech, a direct to consumer FinTech brand that is not a bank. It seemingly doesn't plan to be one. What it does is it has a proprietary algorithm. It moves your money to savings at another bank for you, right? That is its value prop. It has a subscription price. And the way people think about what they're paying for is very different than the way they think about how they pay for traditional financial providers. Some of that's good news, some of it's bad news. But your instinct there is, I think, absolutely right.

Simon Powley (17:10):

Yeah. Well, good, good. Well, let me ask this a little bit. All of these, whether it's retailers or in branches, however you want to call it, their experience is really changing. So the goal is to create the sustainable.

Simon Powley (17:24):

The way you described it earlier, I think, is right on with the frictionless kind of customer journey. That's really critical to the customer experience and therefore, customer retention moving forward. Retailers like Amazon, that's really frictionless from my perspective. Apple. They're doing a lot. And I think there's some things there that branch banking or retail banking, in the traditional sense, could learn from that. So what's the one or two things that you think that FIs could learn from those kinds of industries that would make the biggest impact quickly for them?

Peter Wannemacher (17:57):

I'm going to cheat a little bit and I'm going to give you five. I know you asked for two or three.

Simon Powley (18:01):

Yeah, great. No, more the better. I'll take it.

Peter Wannemacher (18:01):

I'll try to go fast.

Simon Powley (18:02):

All right.

Peter Wannemacher (18:04):

A couple of these, the first couple were true five years ago when we did this research in depth. And we continue to do it, but I think that was a pretty dedicated research stream we did. And then there's a couple that are not new concepts, but are areas where retailers really have moved well ahead of most banks. Really, the vast majority of banks. I'll name them quickly, and then we'll circle back. And there's some overlap in here. I did not have time to make this perfect or mutually exclusive in every way, but I hope they're still... My goal is to make them useful.

Peter Wannemacher (18:37):

Video, the use of video. And really, video and multimedia.

Peter Wannemacher (18:41):

Search, the use of search. Making search not just a check the box element of digital experiences, but a really effective and ultimately beneficial to both parties, the customer and to the bank.

Peter Wannemacher (18:55):

Notifications. Alerts and notifications are one of the most powerful drivers of engagement in banking. Our data has shown that time and again, and yet retailers are better at notifications in many ways, not in all ways, but in many ways than banks.

Peter Wannemacher (19:09):

The fourth one's a little funky, but I'm going to use it because I think it's actually... And I have an example from McDonald's that I really love. Which is just the value of time or the incredible value of time to customers. I'll talk about that one in just a second. I don't think banks ignore this, but I think they could look at how some retailers think about it. If McDonald's a retailer. But there's some other firms that look at this... I mean, Walmart actually does this really well as well.

Peter Wannemacher (19:35):

And then the fifth one is personalized recommendations. Something I touched on earlier, but I'll talk about... This is where some direct to consumer retail brands are better at this than traditional retailers or than banks. So those are the five, video, search, notifications, the value of time, and personalized recommendations.

Simon Powley (19:52):

Well, good. Well, give us a 30,000 foot view of those.

Peter Wannemacher (19:55):

All right. Video, ultimately I want banks to do great work with video. In the meantime, I kind of just want them to... And I don't mean I want them. I don't really care. I don't have a dog in this fight. What I mean is they will be more effective and more successful in their goals, in their business outcomes, in their customers' experiences if they do these five things, just to clarify. I'm going to say things like as though Peter Wannemacher cares. I only care because I want my bank clients to be successful.

Peter Wannemacher (20:21):

So video, eventually I want them to make the best videos in the whole world. In the meantime, I just want them to make more use of video. Video somewhere between, and it varies by segment, by brand, and actually by use case, but somewhere between 20% and 40% of a given customer base, most of the time, would prefer to consume information through video. Like I said, that varies a lot, right? So there are certainly... I won't get into all the use cases.

Simon Powley (20:51):

When you're talking, Peter, about video, you mean really like a vignette or YouTube, those kinds of... You're talking about that kind of video. Is that right?

Peter Wannemacher (21:00):

The research I just mentioned, the 20% to 40% preferring to consume that, I'm referring to on demand video. I mean, I guess it could be personalized on demand, but it's one way, right? It's not two way live real-time. It is one way yeah, content.

Simon Powley (21:15):

Got it. Yeah, and-

Peter Wannemacher (21:15):

Exactly. Yeah, yeah.

Simon Powley (21:15):

... that's the differentiation I wanted to make. Okay, got it. [crosstalk 00:21:17].

Peter Wannemacher (21:17):

No, I think there's a place for two way real-time video chat, and there's a place for broadcast video that's not on demand. But no, I'm really talking about it when you look at what retailers do really well, it's the video content.

Simon Powley (21:30):

Got it.

Peter Wannemacher (21:30):

A quick data point on here, because you and I, a lot of this conversation came out because of COVID-19, right?

Simon Powley (21:37):


Peter Wannemacher (21:37):

During COVID-19, Forrester was looking at the content being provided to bank customers by their banking providers and FinTechs, right? We also looked at firms like Digit, like Emma, Acorns, a bunch of others. Over 90% of traditional banking providers, and this was as of mid-year 2020. So we were maybe... We weren't quite six months into the crisis, but we were well into this crisis. Every bank we looked at had some content around COVID-19. Over 90% had zero video or multimedia content to speak of to help customers understand what was happening, what they could do about it, what their bank could offer. That's in a world where video is increasingly cheaper, relatively cheap and relatively easy.

Peter Wannemacher (22:22):

My colleague, Nick Barber, has written a lot about video technology that enables banks of any size to offer this. Helping customers understand the situation and maybe things like payment deferrals, how to ask for mortgage pauses, things like this. Or even things that they may not have used before like remote deposit capture. A lot of people used that for the first time during the pandemic. Over 90% of banks offered zero video or multimedia content to help them with that. That's a real shame. Again, I don't mean to diss banks, but I know [crosstalk 00:22:53].

Simon Powley (22:53):

No, yeah. No, I get it. Yeah.

Peter Wannemacher (22:56):

So that's video. I think that we'll circle back to these if you want to in a second. I'll try and go a little bit faster on the rest.

Peter Wannemacher (23:03):

Search. I mean, there's a lot of good... I mean, there are some great banks that do search well, like Intesa Sanpaolo and mBank, both European banks, interestingly. USAA is better than most American banks, but even they fall short of some of the European ones.

Peter Wannemacher (23:18):

In terms of retailers, I mean, if you look at what some firms like Amazon offers. I mean, Amazon uses deep learning to improve their search, and in some cases, embed recommendations within search.

Peter Wannemacher (23:31):

Now, for them, they can be a little more nakedly sort of cross-selling, which banks shouldn't be. But if you instead embed advice or guidance, right? So Scotiabank in Canada does this really well within their mobile app is helping customers as they're looking for something. Not just sort of give them an answer, but guide them to the appropriate product or service or experience.

Peter Wannemacher (23:52):

There are banks that are improving search, but retailers are ahead of them. Part of that's because retailers have to, right? That's often how they improve sales conversion rates, et cetera. Amazon-

Simon Powley (24:04):

Got you.

Peter Wannemacher (24:04):

... that's what... Over 33%. I think it's somewhere around 35% of Amazon's sales come from recommendations, including within search. So they have to do that. But that's something where banks are falling short.

Peter Wannemacher (24:16):

Notifications. I'll cite two retailers quickly. Notifications, banks are really good at offering lots and lots of notifications. They're really bad... So if you think about notifications, what you want to be doing, any company, and every executive and strategist and manager should be hearing this pretty clearly, you want to make it as convenient as possible for a customer to enroll in, manage, receive, and take action on a notification or alert as possible, right? That's what you want to be enabling is those four elements. Enroll in. In other words, adopt, onboard, whatever you want to call it. Enroll in, manage, receive, and take action on.

Peter Wannemacher (24:55):

Banks are good at having lots of alert types, which there's some value in that. But they are really bad at making the notifications experience, the alerts experience valuable for clients, or as valuable as it could be.

Peter Wannemacher (25:06):

Two quick examples. Sephora. Sephora does a lot of stuff really well. I mean, we look at them around personalization as one of the stronger retailers in the world. Specifically, they have various notifications to their members that are incredibly valuable and relevant and timely, right? They really nail that, especially the last two of those, receive and take action on.

Peter Wannemacher (25:27):

They have back in stock notifications. So it's very common in retail for someone to want something. It's not there yet, but it will be back. It obviously helps the brand, the retailer, to get them to come back in and buy things. So back in stock notifications seemed like a no-brainer. But Sephora is not the only one to offer them, but they really have some of the strongest ones. And sadly, many retailers, I won't claim to know whether it's a majority, but many don't. And it's helped Sephora. So this is not the only driver, but Sephora has had over 20% growth in 2019. That was before COVID. We can talk about what that impact is, but they were really harnessing the power of notifications.

Peter Wannemacher (26:03):

And then Starbucks. I cite Starbucks a lot. There are some things that Starbucks doesn't do fantastically, but their calls to action are really valuable, really clear. Now, customers expect something different from Starbucks than they expect from a bank. That's fine. But what they share is when you receive an alert or notification, it should be clear what you're getting, why you're getting it, and what you should do about it if appropriate.

Peter Wannemacher (26:25):

Starbucks does a good job of helping you understand what the call to action is, and if you want to take it, what we call the post-call to action task flow after you click on the thing is really strong in Starbucks in a way that honestly... I mean, I don't want to pick on too many banks. Besides a couple of examples from... Capital One does some notifications really well. And they're not the... I mean, there are some good examples here, but they're pretty few and far between. Starbucks is much stronger there.

Peter Wannemacher (26:52):

And then I'll finish up quickly. The incredible value to them. I guess maybe I'm a little addicted to this one example that I really like. And my colleague, Brendan Witcher, shared this with me. But McDonald's, they started partnering with this personalization and AI firm called Dynamic Yield. They eventually acquired them because they were such a competitive advantage to them. My favorite data point, because it's one of the ones that McDonald's thinks is most important, is from 2019 to 2020 in the two like periods, two apples to apples periods, obviously COVID, but we can talk about that separately, drive-through time, when controlling for other factors, decreased 30 seconds. 30 seconds can make a big impact in any experience.

Peter Wannemacher (27:32):

You and I might have grandparents that are rolling somewhere, maybe beds, maybe in graves, but about the fact that 30 seconds makes such a difference, right?

Simon Powley (27:41):


Peter Wannemacher (27:43):

We're on our phones while we're watching TV while we're on the internet as well. But putting all that aside, the making fun of modern people, it makes a big impact. And respecting and valuing customers' time is something that banks... If you look at task flows around bill pay, for example, they've actually done an okay job. I mean, this is true of a lot of what I'm talking about around what banks can learn from retailers. Very rarely is it that banks have just failed miserably, right? But they could stand to do a lot better and be more like what McDonald's is doing and others. Again, Walmart does this really well as well. Is just removing a few seconds from the time the person has to be in line is incredibly beneficial, right? Airlines have found this in the past, and it's incredibly powerful.

Peter Wannemacher (28:29):

The last one I'll mention really quickly is personalized recommendations. A good chunk of customers of any company want... A lot of people do want to be in control of how they shop for something. So we should not ignore those people. But there are many folks, right? It varies by brand, by industry, by segment, by use case. But a large share of folks, sometimes bumping up into 50% or even well above a majority, again, depending on the circumstances, prefer to basically get asked a couple questions. It varies by the complexity of the product. And then get a recommendation.

Peter Wannemacher (29:05):

Stitch Fix does this really well, right? It's basically in the form of a quiz for them, because it's a fashion retailer, and they use that to accelerate and strengthen the onboarding experience, as well as other aspects of their offering. And as a result, they've seen really... For example, again, I'm stealing this from one of my colleagues, Brendan Witcher. But their six-month retention rate is about 30%, which is really strong for a direct to consumer retail brand, right? People often sort of try something out and then abandon it as banks know in some other areas of our services. So that ability to get people engaged, part of it comes from personalized recommendations. Not the only factor, but it's a really important factor. Any of those you want to dive into?

Simon Powley (29:45):

I know the personalization piece with Stitch Fix. I actually leveraged that myself. My wife turned me on to that. The app is really easy to be able to leverage that. Is there a way that you see these being solved for in the mobile arena specifically? Because it seems like it's gravitating to that. So when you think about the use of search or personalization, the value of time, it seems like the mobile device was in there. Any comments specifically on what banks could learn from mobile aspect? Because I get a lot of questions about that from my FIs.

Peter Wannemacher (30:20):

Yeah, I mean, I think... I didn't even realize this until you said it. So while the things I just named are not exclusively about mobile, each of them has an outsized role because mobile is increasingly the hub of people's banking relationships and many other relationships. I want to make sure I'm answering your question appropriately, but my quickest answer is all of them, mobile has downsized.

Peter Wannemacher (30:47):

I'll give a quick example, and I won't name the bank here. But there is a bank, a pretty large bank in the US, that developed a... I believe it was 55 seconds. It was just under a minute. Short video to help people understand how to use mobile deposit capture. Actually a fantastic little video. They put it on their website and didn't put it anywhere on their mobile app or their mobile website. Nothing. Didn't exist. No guidance to it.

Simon Powley (31:14):


Peter Wannemacher (31:18):

I don't want to pick on them, because I mean, this is an error that I hope they will remedy very soon. But it's a great example where video... They've done the work of recognizing the value of video, and video has a role to play in traditional PC-based websites. But its impact, especially in that exact example, because the use case is primarily mobile, is really at this point, exclusively mobile. It was an error, but a bad error, right? Yeah.

Peter Wannemacher (31:48):

So yes, I think that every one of these... I mean, all of them, mobile puts into sharp relief the time that is being utilized by the person, right? So for all of these, including of course the time one that I mentioned, but all of these, that has a big role to play. So yeah, did I answer your question?

Simon Powley (32:09):

You did. I think it's spot on. Let's keep on the theme of kind of acceleration or transformation in these kinds of services in retail and branch banking. Let's talk a little about COVID. I know our audience, certainly it's still top of mind. We're seeing things creep back up right now. So as operations begin to kind of stabilize and we transition into this new normal, whatever that looks like, we are seeing obviously the role of self-service and digital channels within the branch networks and financial institutions really important within communication and relationship management. So how do you really see that COVID has accelerated this, and what are the kind of downstream implications you can kind of point us to that you're seeing come out of this?

Peter Wannemacher (32:54):

Yeah. I mean, you said something as a bit of an aside but it's true is we don't yet know what it looks like. There are some things I think we are increasingly confident will be true. There I said we as in Forrester, based on our research and our data. But I'd like to think that the banking industry, the financial service industry as a whole is starting to recognize this. And I think it's a good thing, right? Well, A, it's reality. So you have to recognize it eventually, but it's also a good thing to get ahead of it.

Peter Wannemacher (33:18):

That is that we've hit an inflection point when it comes to many digital self-service needs for customers or maybe their wants, right? But what I mean by that is a majority, roughly two-thirds, of millennials have tried a digital banking service for the first time during COVID. I cite millennials not because they're... I mean, they are over-hyped, right? Or they're at least hyped, and there's lots of press things about them and we've all seen too many keynotes about them.

Peter Wannemacher (33:50):

But I actually think for bank executives specifically, and this one more so than retail. It's really not speaking to the bank executives. Millennials are the best leading indicator when it comes to digital experiences, and probably the best leading indicator when it comes to the impact of COVID-19. That's because there is the combination within the millennial segment that is not wholly unique, but especially pronounced. That is they are savvy enough with digital technologies and touchpoints that they are comfortable with that, right? So you don't see some of the same inhibitions or prohibitions resistance that you see in some older generations. And in combination with that, or maybe I'll say at the same time, their financial lives are complex enough that they have needs that are different and are a better indicator of what's to come than their peers that are younger than them, right? Primarily Gen Z. Not to scoff at Gen Z. Gen Z is going to be very important.

Peter Wannemacher (34:54):

And my goal here is not only serve millennials. But really it's not about who you serve, it's about who you look at to start to get a sense of what the future looks like. Remember, millennials now are heading into their forties. I should say some of them are. Oldest ones are 39, right?

Simon Powley (35:10):


Peter Wannemacher (35:10):

I think even maybe a couple are getting into 40. Again, this is on average, but it's still really telling is their financial lives are more complex.

Peter Wannemacher (35:19):

Just to be clear, large shares of every generation tried some digital banking service for the first time, but the ones I care the most about are millennials. That brings me to point number two which is among those people who had used the digital banking service for the first time, more than two-thirds say they plan to keep using those even after COVID-19 is quote, unquote, "over," whatever that ends up meaning.

Peter Wannemacher (35:41):

And the self-reported data... My background is in data and statistics. I want to be careful. It's not that we just take people at their word. But two-thirds is a pretty big jump.

Simon Powley (35:52):

Sure is.

Peter Wannemacher (35:53):

Or a pretty large share. And the truth is what I think will really play out is that that will be true for almost all routine interactions and transactions, right? Almost all routine objectives that bank customers have. There will still be some complex ones where... And that's the one that's much less certain. So some will still want to go back to branches. Some will still want to have phone calls, certainly. Some might think about video calls, right? There's a lot of investment there. I think it's too soon to know whether that will play out the way people think or hope. But certainly, it's an understandable area to be investing in.

Peter Wannemacher (36:29):

Sorry, I'm probably going on a little longer than you needed me to, but the big headline is that there's been this inflection point. And I'll quickly add in another one that our research shows, and this is important. And you and I discussed this a little bit in the past. Not earlier today, but I mean in our past conversations.

Peter Wannemacher (36:44):

The second point is while that's a big, important headline, that's a big shift that I talked about, right? We've hit a tipping point. We've hit an inflection point. We're literally not going back in many ways, especially around digital payments, lots of routine digital money movement and digital money management. What has not changed, at least as of yet, is the mental model bank customers have of what role banking products and banks play in their lives. So there has not yet been some sort of foundational shift in what I need.

Peter Wannemacher (37:20):

It's still true that they're increasingly willing to experiment with FinTechs, direct to consumer FinTechs, right? I mentioned Digit. There's obviously Chime and Varo Money in the US I mean. But I think all of those, when you think about the role that banking products and banks play in people's lives, we don't see any reason to think that's changing in 2021 or because of COVID-19. I'm happy to talk about the 20 years down the line questions, but in terms of the impact of COVID-19. Does that make sense?

Simon Powley (37:52):

Absolutely does. Peter, I want to thank you so much. I have enjoyed the conversation and I always learn lots when I'm here talking with you. So I hope we can do this again soon. I think there's some great takeaways from today. I think we've got a few more topics we can discuss. But listen, I want to thank you again. It's been informative, it's been very beneficial, and I think there's a lot of lessons that certainly can be learned through this.

Simon Powley (38:15):

Thanks for our listeners for tuning into this episode of COMMERCE NOW. For more information, certainly go to our website at, and you'll get a series of experts' perspectives on some of the industry's hottest and most talked about trends. Have a great day.