5 Forces Reshaping Bank and Credit Union Innovation Strategies

Here are five trends redefining how many financial institutions will approach their strategy to marketing, product innovation and the service experience this year.

A team of analysts at Mintel Comperemedia identified and analyzed five key trends that they predict will impact the U.S. financial industry significantly in 2016, including where the industry is headed next and why marketers should care. In their report, “Financial Services Trends 2016,” they touch on everything from marketing to UX design and privacy.

1. Robo-Advisers: Power to the People

There has been an increased interest in financial advice among young people who don’t have enough assets for a personal adviser and, as a result, a growth in the availability of “robo-advice” — online wealth management offerings that provide advice based on formulaic algorithms rather than in-person consultation.

Considering that 45% of Millennials believe the advice they can get from robo-advisers is as good as they could get from a human adviser, it’s no surprise that Mintel says robo-advising will gain more traction. Some startups in the investingsector have already developed platforms that can offer automated asset allocation recommendations based on consumer preferences and risk levels at a fraction of the cost of traditional advisers. Mintel singles out companies like Robinhood, Betterment, Wealthfront, and LearnVest as pioneers in the robo-advising space.

The robo-approach appears to be working. Mintel says assets under management for the top robo-advisers will surpass $2 trillion by 2020.

What’s the lesson here for banking providers? It isn’t necessarily that you should dive into the automated investing game too. But if Millennials are comfortable steering their investment portfolios based on robo-advice, that surely means they would be receptive to a similar experience when shopping for- and subsequently managing banking products. Armed with the right data and algorithms, a retail bank or credit union could automate a wide range of AI-powered robo-suggestions — starting with onboarding and cross-selling. Could a cross-selling Siri-like avatar be on your horizon?

2. Gen Z: Starting Early

Mostly in their tweens and teens, Gen Z can loosely be defined as kids between 8 and 20 years old, deeply entrenched in technology and social media, brought up in a real-time world with instantaneous information available at their fingertips, and considered to be more pragmatic about their futures than their Millennial counterparts.

And, as Mintel astutely observes, Generation Z may be the consumers of the future, but they are also the children of customers today. The challenge, according to Mintel, is that marketing/communications can either be targeted directly to these teens, tweens and young adults, or to their parents, or both. Mintel recommends both — meeting Generation Z and their parents head on, with a combination of products, services and education that will get them engaged in their financial future. According to Mintel, banking providers need to start tailoring their products and services to target this growing segment of the population — one that is heavily dependent on technology and still has a lot to learn.

Younger consumers rely heavily on technology, and they look for tech to be incorporated into nearly anything they interact with or buy. If you’re doing digital right, the experience should be fairly simple and intuitive — something that should please all audiences. As Mintel points out, parents will appreciate a more seamless experience as they try to teach the basics of finance to their children (think: digital allowance accounts, or being able to monitor their spending on a mobile device). If your interface is simple enough for a kid to understand, it should be easy enough for a parent to teach/demo, and vice versa.

3. Security: Watch Out for Me

Mintel urges financial institutions to remain diligent when it comes to marketing new and improved security measures. One way to do this is by offering services that double check customers’ transactions and statements for inaccurate or fraudulent activity. However, Mintel cautions that there needs to be a balance between “helpful oversight” and “evil overlord.” With as much data as consumers make available about themselves today, banking providers will find themselves walking a fine line between an institution that can be trusted and one that has overstepped privacy boundaries.

However, Mintel notes that consumers are growing increasingly comfortable with brands utilizing their past transaction history or purchasing behaviors as a way to offer additional services or recommendations. For instance, Citibank’s Price Rewind automatically notifies a customer if there is the possibility of a price-adjustment on a previously purchased item if it is found for less somewhere else. Amazon is known for predicting a customer’s next purchase based on past purchases (e.g. buying baby items one month, then getting an offer for toddler items a year later). Capital One’s Second Look feature is positioned as the first bank offering to look out for an account’s well-being and promises to watch for unusual, duplicate, and auto- renewal charges.

Mintel says financial marketers are coming up with more creative and out-of-the-box ways to show how serious they are about security.

“It is becoming a point of competition that could drive consumers to another institution,” warns Mintel in their report. “Security is more than just protecting customer identity or credit information in the event of a data breach. It is becoming a matter of protecting consumers’ entire financial portfolio.”

4. Technology: Digitizing the Human Touch

While the banking industry has obsessed about self-service technologies and pushing consumers into DiY digital channels, Mintel says financial institutions can leverage technology facilitate more face-to-face engagement — not less.

“Branches are not going away,” Mintel says. “There is still a place for one-on-one attention and human interaction.”

Some services will always need to be delivered through human interaction, which is why many players in many industries are exploring innovative ways to deliver their services through technology — allowing that one-on-one attention customers crave every now and then, particularly when it comes to advice and guidance.

For instance, The Cleveland Clinic in Ohio offers virtual “nurse- on-call” services for consultations, and provides diagnoses through video chat. And SunTrust now offers a virtual wealth management platform, SummitView, where clients can view their entire financial profile online, but also use the online tool while collaborating with personal advisers.

According to Mintel’s research, some 42% of consumers overall say they would like to be able to schedule an appointment with a personal banker either online or via their mobile device. The percentages are much higher among Millennials (68%) and Gen Z (69%). Armed with little more than a Skype-like interface, financial institutions can still offer that human interaction through digital channels — at a time and place that’s convenient for the customer.

“We’ll see chat capabilities move away from typing to an actual video conference, where customers can speak to and see a banker or advisor,” Mintel predicts.

5. Mobile: Becoming an ‘Eye’ Bank

Consumers are looking for more and more transactions they can do on their own time from anywhere, but they are also looking for ways to make those transactions even faster. Consumers are increasingly comfortable with the syntax of mobile communications — including images and emojis — which is a trend financial institutions can capitalize on. From verifying credentials with a selfie to using emojis for a password because they are easier to remember and more secure, it is becoming more popular than ever to engage consumers with visual and graphic communication vs. text. Mintel says we could see images and emojis being used for text-based banking. For instance, instead of texting the word “balance,” one would send an image of money.

“If emojis and other forms of visual communication are the prefered language of consumers, marketers need to learn how to speak it,” Mintel says. “It’s more than just targeting Millennials and Gen Z. It’s about how to incorporate the use of images into products and services to make them easier, convenient and more efficient.”

In short: The only thing people hate more than reading is thinking, so make it visual (whatever “it” is — marketing, website, UX… everything!).

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