If you have been reading this blog for some time you know we love mobile and online banking. Progressive banks and credit unions are investing more money and resources in developing their digital banking solutions to delight their customers and pave the way toward the future. One of the financial institutions that has been striving to take a lead in banking technology is Citizen’s Financial Group of Providence, Rhode Island. American Banker interviewed the newly appointed head of digital for Citizens, Lamont Young, who had some interesting insights about the future of digital banking, many of which we have been observing for a while now:
1. Convergence of digital banking channels – Mobile banking has been the market buzz for some time now banks and credit unions compete to make the most of the popularity of the smartphone. Research from Javelin Strategy shows that, for the first time, mobile banking is outpacing branch banking. And there are a number of customers who do most of their banking at home via the web. Young, like so many others, see mobile and online converging into a single digital banking channel.
Today’s consumers are interested in convenience, and whether that’s using their smartphone, their tablet, or their laptop, they are all in favor of any initiative that saves them a trip to the bank. Citizens already has 85 percent of its banking services available online, and the digital channels are going to blur so that customers will get a similar experience online of via mobile device, although banks are going to lead with mobile access first for the foreseeable future.
2. New financial technology startups offer new opportunities – We have written about financial tech companies in the past and the potential threat that Apple Pay, Google Wallet, PayPal, and others pose to banks and credit unions. New fintech companies seem to hit the market every day, and banking pundits are divided on their impact on the industry.
Young sees these fintech challengers as a positive influence on banking, As he says:
“I'm actually more excited than most about the advent of fintechs, particularly some of the new startups, because I see them less as threats for traditional financial institutions and more of an opportunity — an opportunity for us in some cases to partner, an opportunity for us in other cases to acquire, and in some cases just an opportunity to learn.”
One thing is for sure, new financial transaction models driven by technology are going to continue to emerge, and banking can learn by their example. One thing that startups bring that banks do not is a willingness to try new things. Start-ups are particularly adept at adapting to customer needs, adopting to the theory that it’s better to “fail fast” and adjust your strategy based on feedback; something banks should try.
3. Banks need more than better products to compete – One thing that Young has learned at Citizens is that banks can no longer compete using products alone. Today’s consumers tend to be more concerned about the banking experience than the products themselves. As Young notes:
“We have found that brand experiences in many cases mean more to the customer than the actual products and services of the brand itself. We have done a ton of work around experience-mapping and taking a look at where we are as part of the customer life cycle, what those touch points are, whether they engage with us in a digital channel or within our branch network or over the phone.”
Of course, that doesn’t mean that banks and credit unions can stop offering superior financial products. It’s still essential to be competitive with product offerings and rates. However, consumers are shopping for both products and brand experience. You may offer the best rates around, but it’s ease of use and technology-driven product access that will keep customers coming back.
You are going to see more financial institutions creating roles such as “head of digital banking.” Technology is changing too fast and becoming too important to leave in the hands of marketing or sales executives who have other concerns. Digital banking has come into its own, and smart banks and credit unions are getting smarter about how they harness digital to improve customer satisfaction.