How Banking Technology is Changing Banking Customers
January 30, 2019
The following post is adapted from Katie’s talk at the Maryland Banker’s Association’s 11th Annual CFO & Financial Management Forum. HighRock wants to extend their gratitude to the MBA for the speaking invitation and being a part of the annual conference.
Technology has outpaced the banking industry. Within the next few years, your current products, services, and technologies will not meet the needs of your future customers, because the slow and steady banking system cannot compete with the rapid pace of digital innovation. Since its inception in 2008, the FinTech, or “Financial Technology”, industry has seen incredible growth. This new tech comes in several different forms; there are budgeting apps (Mint, YNAB, Wally, Acorns, Coinbase, etc), online loans (LendingTree, Lending Club, SoFi, Earnest, Avant, etc), and P2P payment (Venmo, Cash app, Zelle, Snapcash, Facebook Messenger, Apple iMessage, etc). People can budget their personal finances, apply for a loan, and pay their rent without ever opening their wallets. That means that you, their bank, just lost those customer opportunities.
A recent study showed that 71% of Gen Y would use entirely computer-based generated support for banking services. A “bank” as we know it - the nice building with columns on our local main street - is no longer necessary. Why is this trusted foundation of our communities becoming irrelevant? Because online banking is so dang easy.
How FinTech is Beating You
Small, community banks are losing out to online solutions because banks are not digitally consumer focused. Millennials are the core demographic that are turning to FinTech solutions over traditional banking methods. More than any of their peers, they opt for quick convenience; millennials and Gen Z make online decisions in record time – milliseconds.
Without offering online banking and related services, your brand risks losing relevancy and legitimacy with customers. So, how do you grow if your customers don’t think to bank with you? Do you have a hope, as a community bank, of staying relevant?
Staying Relevant and Building Trust
Of course there’s hope. And you might be surprised to learn that as a traditional financial institution, you’ve already accomplished a key business hurdle that online platforms can rarely achieve: trust. As a community bank or local financial institution, you have a wealth of trust in your community, because you know one another. Your kids go to school with their kids, you’re coaching basketball, you run into someone in the grocery store. This interaction builds trust, which is at the center of any customer’s financial decision. Online platforms can pay thousands for online advertisements, though they will not be able to replicate the trust you already have with your local customers. The brand loyalty that the digital companies are trying to do - you already have it.
See? It’s not so gloom and doom after all. Building on a foundation of trust, now you simply need to make steady updates to your digital presence.
A few immediate takeaways:
- Host an internal digital audit and renovation. Put yourself in your customers’ shoes, and evaluate each step of their digital interaction with your institution. Research the developments in the FinTech industry and the trends among your market demographics. Take this information back to your offices and consult with your staff about how you’re doing with digital technology. Be brutal with yourselves. You don’t need to take action at once, but make sure you’re aware of your necessary areas of improvement. Form a wishlist, and take steps to update them.
- Form a consortium. There is a never-ending amount of online banking regulations that you and your team will have to learn to navigate. The good news is that you don’t have to go it alone; you can ask for help. Talk to your associations, such as the MBA, and form or join a consortium with other banks. Consortiums such as Alloy Labs Alliance is a joins banks of many sizes together in order to encourage innovation and technology adoption. For example, if you’re using a particular online banking platform that feels “outdated,” and you feel you can’t do anything about it - join together with other banks who have the same problem. You may not be able to afford a new platform on your own, but if other banks have the same issue, you have a better chance at creating new options.
- Know your customer and know the FinTech tools they may want. Make sure you understand your customers – they are your base and your ambassadors. Treat them well and make an effort to offer tools and features that they’re asking for. But don’t assume that this trust you build will be the only tool you’ll need. The world changes, and with it, your business and your customers. However, if you remain vigilant towards digital fluctuations, you will remain intact.
If you’re ready to get a fresh start with your marketing campaign in the New Year, contact HighRock to get started!