The Future of Banking Embraces a Digital World
The banking ecosystem is no stranger to coping with changing market conditions, unpredictable climate and societal change impacting the economy, and much more. In all these situations, the response has been noteworthy, creating sustainable business. But, since the pandemic hit us, things have taken an unexpected turn.
The biggest lesson the industry has learned during this period is that there is no existing rulebook to deal with the ripple effects of a global health crisis. As a result, the leaders had to look for new ways and methods for decision-making.
From people who feared getting coronavirus infected by touching surfaces, paper bills, and coins to banks limiting their access and operating hours, the unprecedented times drastically changed the relationship dynamics between banks, credit unions, and their customers.
Digital innovation is happening faster than imagined, and people are bound to need navigation tools. Thanks to emerging technologies, banks could innovate existing business operations and stay engaged with customers virtually.
The bad news is, the banks and credit unions resisting change will struggle to survive. It is time, right now, to evaluate the banking industry business model and pivot to new ways of doing business.
Let us delve further into the growing needs.
Mobile Banking Over Online Banking
Most Americans access their smartphones for almost everything – right from shopping to banking. And since last year, many more have turned to their phones for checking their bank accounts, daily transactions, etc.
Both mobile and online banking consolidate to make the digital banking landscape and are often used interchangeably. But there is a difference in use and the end experience. Since last year, the popularity of mobile banking has grown, bringing down the number of online banking customers. The statistics are a clear indication of the changing trend.
According to the Ipsos-Forbes Advisor U.S. Weekly Consumer Confidence Survey, roughly three in four Americans (76%) have used their primary bank’s mobile app in the last year for banking tasks like depositing checks or viewing statements and account balances.
Though mobile banking is largely used by the younger population, millennials, and GenZs, the convenience of banking through a smartphone is drawing every customer demographic. Despite the huge growth, it’s not an easy ride for banks and credit unions to keep up with this change and address the demand for mobile tasks like bill pay, accounts receivable, deposits, information searches and more.
What’s Next: Neobanks
Neobanks are a recent entrant in the digital banking landscape. Sometimes referred to as “challenger banks,” these Neobanks are financial technology firms that offer apps, software, and different technologies to make mobile and online banking more streamlined. Almost all are primarily online-only banking platforms with no physical branches. However, they are different from online banking and cannot be combined as one. (Walden and Strohm 2021)
The entry of digital-only banks was slow here due to strict regulation protocols. Still, experts predict that relaxation in these regulations can create more demand for customers looking for digital financial services. As per an Insider Intelligence projection, Neobanks like Chime and Varo will grow by nearly 19 million account holders between 2021 and 2025. Around 40 million or 10% of U.S. adults will hold accounts at digital-only banks by the end of 2025. (Lebow 2021)
Neobanks are a litmus test to digital acceleration in banking with innovative technologies like artificial intelligence, blockchain, machine learning, advanced APIs, etc. This new trend may not appeal to everyone.
Consumers still have embedded relations with traditional banks and credit unions. The brick-and-mortar branches of these institutions give immense assurance to these customers who like in-person access to their accounts. Also, Neobanks have limited customer service as compared to traditional financial institutions. So, it is challenging to quickly shift consumers’ preferences and move their financial assets from one established unit to a lesser-known provider. Who is comfortable with an outsourced customer service team on the other side of the world?
How Do You Strike a Balance for an Enhanced Customer Experience?
Choose a bank, credit union, or any other financial institution; it all comes down to having customers and retaining them. Of course, digital resources are now a significant center point for these institutions, but where does one-on-one interaction with the customers come into play in the traditionally known in-person business sector?
For banks to use their digital promise fully, they need to deliver an omnipresent experience – a mix of digital and in-person interactions, using data smartly and deploying efficient service delivery models. For example, a new customer signing up for any service can easily do it from the comfort of home and interact with the bank representative using sophisticated A.I. technologies.
Haltner Design + BUILD Can Assist in Enhancing Customer Experience
For over 30 years, Haltner Design + Build has had a market niche in designing and building Banks and Credit Unions. We have remained in the trenches of change with our bank and credit union clients.
We can help you get the right balance of technology for clients and create a trusted community resource for the needs of growing businesses. A facility renovation does not mean just an update to aesthetics. Instead, create efficiency and convenience for employees and clients while answering the needs of a growing business community.
Walden, Stephanie, and Mitch Strohm. “What Is A Neobank?” Forbes, Forbes Magazine, 24 June 2021, www.forbes.com/advisor/banking/what-is-a-neobank/.
Lebow, Sara. “When US Neobanks Will Hit 40 Million Clients.” Insider Intelligence, Insider Intelligence, 1 June 2021, www.emarketer.com/content/neobanking-on-growth.