An interesting article from the Financial Brand came up recently, discussing four digital banking trends that banks and credit unions should be mindful of based on research by banking provider Alkami. We thought we’d dissect these trends and provide some additional context.
Accept digital payments
This one is a no-brainer. The younger generation loves a cashless system with digital payments and wallets being the norm rather than the exception. We’re not going to spend a lot of time here because we believe the other findings are far more interesting.
Collaborate with fintechs
Fintechs, or financial technology companies, provide valuable expertise and services that banks and credit unions may not have the time or resources to develop on their own. According to the Alkami research, half of surveyed banks already partner with fintechs and 40 percent of credit unions do as well. Leveraging these partnerships allows banks and credit unions to compete more effectively -- those who don’t risk falling behind their peers.
Larky is one such fintech helping banks and credit unions be more competitive by helping them better engage with existing account holders through push notifications delivered directly from the mobile banking app. Boosting customer engagement can ultimately have a significant impact on the profitability of banks and credit unions. Studies show that fully engaged retail banking customers bring in 37 percent more annual revenue to their bank than disengaged customers.
Focus on hyper-personalization
This is by far the most interesting takeaway from the article (in our opinion). Bank customers and credit union members are no different from anyone else in expecting a more personalized experience in every facet of their lives. In an increasingly digital world with less face-to-face interactions, it’s more important than ever to remember that there are people behind the app logins and that they have a unique story of why they’re on their financial journey.
Unfortunately, more than two-thirds of banks and credit unions surveyed by Alkami said they were not using hyper-personalization to gain a competitive advantage. (A key reason for this is a lack of data and/or ability to analyze and provide results on that data.) Our advice to financial institutions struggling in this area: Start by meeting your audience on a channel you know they’re on. For many people, that’s their mobile device. If you’re struggling to personalize your communications because of a lack of data or inability to analyze that data, start small. Even something as simple as geo-location can be used to personalize communications to people at the right place.
Use data and AI to uncover opportunities
This is a lot easier said than done: Data is great, but only if you have a way of analyzing and using it to drive strategies. Not only that, but you must also understand how your data can affect and change your strategies at any given moment. That requires mature infrastructure that can handle the massive amounts of data generated, as well as humans behind the technology. Unfortunately, infrastructure and data management are beasts on their own, and people who can train them effectively are in short supply and high demand. We recommend starting small and experimenting with a few data sets to drive growth, testing to see what works. The good news: Most banks and credit unions are already experimenting with some kind of data analysis, according to Alkami.
Perhaps most importantly on this subject, Financial Brand writes: “The key to success is to unlock the information embedded within internal and external data to get a clearer picture of clients’ future needs in order to prepare real-time contextual recommendations. This will drive engagement and loyalty.” We couldn’t agree more. We would just add on to that and say that an equal key to success is to deliver those contextual recommendations through the right channel. Whether that’s mobile or desktop, email or push notification, it all comes down to what your audience wants. And the good news is that if you have the right data, you can easily make that determination.