Retail banking organizations are increasingly hamstrung when it comes to carving out a unique competitive position. By establishing a detailed list of Dos and Don’ts, regulation and compliance seems to have reduced the range of options available for product features and pricing in financial services.
Even if a banking product or service is technically compliant, many traditional financial services firms have adopted a defensive posture and even exited certain businesses entirely. In an environment where the compliance card trumps just about everything else, how can banking differentiate?
Rethinking Banking Relationships
Today’s millennial consumers are telling the banking industry that they don’t require a traditional bank. The good news for bankers is that research shows that, despite what they may say, millennials will continue to use a bank or credit union … if it meets their lifestyle needs.
And even though most of us are far from being a millennial, we’ve seen our own banking requirements change quite dramatically. Many have started to prune relationships and shed unneeded accounts. In the simplest of banking terms, most of us just need a mechanism to pay the people who we owe, and collect the money from people that owe us (leaving aside mortgage payments and retirement savings).
In retail banking, a wave of fintech entrepreneurs are reimaging what products and services a bank should provide and how they should be delivered. In some cases, they are making the mousetrap more efficient and easier to use. In other instances, they’re asking why we’re still chasing mice?
Digital technology has the potential to fuel new product offerings that better meet the evolving needs of consumers. Created with today’s compliance framework in mind, many of these solutions can transform the customer experience, while keeping that risk officer from getting too nervous.
In the banking industry, the Finovate conference showcases the latest in financial technology. Beyond the Arc’s live blogging from the September 2015 event provides a thumbnail sketch of the more than 70 product demonstrations.
Here are highlights from the three top fintech trends that could help a retail banking organization rethink how it engages with its customers and members.
1. Using technology to create a better onboarding experience
When was the last time someone in your bank or credit union journey-mapped the customer experience of opening a new account? Do your customers have to fill out a lot of paperwork to get started? You may be shocked at how many steps new customers need to take, and how much time the process consumes.
As mentioned in a recent article, several firms at the Finovate conference presented ways to simplify both the account opening process as well as the new customer onboarding experience. Seeing that this is the first impression made with an increasingly digital consumer, eliminating paperwork (and unneeded steps) is more important than ever.
The strategic imperative for the near-term is to transform current complex paper forms and document transactions into much more engaging digital experiences … on any device.
2. Natural language processing gets customers to relevant help quicker
Many of us dread calling for customer service, wasting time navigating a mostly irrelevant interactive voice response (IVR) phone tree. Instead of getting caught in an endless loop of menu options, what if your customers could just say what they want?
- Tech innovator North Side demonstrated a new customer experience – using English conversation (speech or typing) to do transactions or access self-service information from mobile devices or computers.
- Using the Nuance speech recognition solution, USAA, a leader in financial services and insurance, rolled out their free Savings Coach app in July 2015. Customers can talk to the app about their financial goals, and the virtual assistant provides personal and proactive information about the importance of saving, analysis of spending and ongoing suggestions for a savings plan. “We’ve seen the benefit proactive financial information can bring to our members,” noted Eric Smith, vice president, technology architecture at USAA.
3. Get ready for the ‘blockchain’ to make transactions faster and more secure
Imagine your bank’s database goes offline just as you’re trying to transfer money to close on your mortgage? Most companies run their business using massive databases of customer and transactional data, but the challenges of managing security and uptime for systems based on aging technology can be costly and overwhelming. As these systems start to show their age, the fallout can have serious impacts on bank operations, as well as the customer experience.
One emerging solution to securely managing transactions is the ‘blockchain’ – but what is it? A January 2015 article explained the blockchain as, “Similar to a database, except the way you interact with that database is different, the blockchain transfers authority and trust to a decentralized virtual network and enables nodes to continuously and sequentially record transactions on a public ‘block’ creating a unique ‘chain’: the blockchain.” As an encrypted log of transactions you can store and share securely, a broader population can be granted visibility into transactions, while being blocked from seeing confidential details like account numbers or personal information.
Blockstack was one of the Best of Show winners at Fall Finovate 2015. According to the company, their platform provides four functions: 1) a private ledger optimized for high transaction volume; 2) asset issuance to represent real-world assets; 3) transaction management that allows users to describe transaction flows between parties; and 4) multi-signature wallet security. This technology has the potential to make transactions more secure, faster, and more convenient for all parties.
Foundation for Strategic Planning
Rather than just slightly adjusting next year’s strategic plan from what was presented at the beginning of 2015, it’s time to shift the conversation. Work with your internal and external business partners to determine how these new fintech trends may impact your organization and build a plan to implement those that can save time, reduce costs, improve operations and better serve your customers.
Steven Ramirez is the chief executive officer of Beyond the Arc, a services firm recognized as a leader in helping financial institutions transform customer experience. Steven speaks and writes frequently about the technology and trends affecting customer experience in financial services. He specializes in data-driven customer insights, aligning brand and marketing with customer experience, and improving business processes to reduce regulatory risk stemming from consumer complaints. Voice of the Customer, social media, big data, and communicating to customers in plain language, are just a few of the topics covered on the Beyond the Arc blog. You can also follow Steven and his team on twitter @beyondthearc or reach them by phone at 877-676-3743.