In the coming year, financial institutions will focus on improving member service with better digital features and data analytics predicts D3 Banking Technology, an Omaha, Neb.-based provider of a digital platform for the financial industry.
“Competition in the financial industry will only become more intense in 2019,” said Mark Vipond, CEO of D3. “Large tech companies now set the standard for consumer expectations, and it’s vital that banks and credit unions advance their offerings to keep customers and members satisfied.”
Leading Financial Institutions Will Take Back Control
In recent years, financial institutions have allowed key aspects of the customer experience to be addressed by third party service providers in areas such as payments and money movement (e.g., bill pay, P2P, A2A). Instead of providing competitive bank-owned options for these services, they’ve allowed and even encouraged consumers to use these third parties, many of which provide a user experience that is inconsistent (at best) and poor (at worst). In 2019, savvy banks and credit unions will work to regain control of these elements through modernizing their digital banking platforms, D3 suggests.
Credit Unions and Community Banks Will Re-Evaluate Their Competition
More credit unions and community banks will begin to understand that their primary competition isn’t necessarily their peers but rather large banks and non-traditional banks. To compete, these institutions will work towards a sustainable and competitive digital transformation strategy. The concept of digital transformation being the updating/replacement of existing, legacy online and mobile products will become untenable.
More FIs Will Establish Digital Owners
The financial industry has reached the inflection point where digital channels are now more popular than branches. Financial institutions have branch managers, so why not have digital owners, someone with decision making power that can manage and support the increasingly important digital channels? Financial institutions must designate an executive-level digital delegate who focuses solely on the digital experience and roadmap. Large and regional institutions not already considering this are at high risk of falling behind. And, ownership is not enough. Institutions need heavy buy in and commitment from the top down in order to create a culture of change.
An Uptick in Anticipation of Customer and Member Needs
According to a recent online survey conducted by The Harris Poll on behalf of D3, more than three in five (61 percent) consumers want their financial institution to anticipate their financial needs the same way that online retailers do. Even though this has traditionally been an area in which banks and credit unions struggle, there is good news — more than three fourths of consumers (78 percent) feel more comfortable with their financial institution having access to their personal data than a large tech organization, which could open the door for making this anticipation possible. Banks and credit unions must leverage this trust to find ways to anticipate needs and provide timely and relevant offerings to customers and members in 2019.
Regional and Community FIs Turn Digital from a Hindrance to Differentiator
The firm’s survey found that 58 percent of consumers reproted they’d rather bank with a community/regional institution over a national one. However, of those that would choose national, 42 percent said it was because they offer a better digital banking experience. This data makes it clear that while regional and community institutions are still attractive to consumers, a material percentage of those same consumers will trade loyalty for a better digital experience. Some banks and credit unions have already begun digital projects that will allow them to compete with the largest players. In 2019, more will join. Those that don’t will lose their relevance as they continue to watch their customers and members leave to find the digital experience they want and expect.
There Will Be More Concrete AI Use Cases — If There Is a Data Element
AI is already transitioning from a buzzword to a tangible way to serve customers and members. Already using voice banking, consumers can have productive conversations with devices such as Alexa about their accounts and financial activities. However, the success of such initiatives is dependent on financial institutions appropriately leveraging consumer data. Without proper data, AI in any form becomes another risk point to an institution’s brand value. In 2019, there will be successes and notable misses in AI, many of which will seal their fate according to their access to consumer information.
“Next year, financial institutions will transform the consumer experience and take control of their digital destiny,” Vipond predicted. “More banks and credit unions will work to provide an optimal digital experience and find ways to incorporate personalization and AI into their digital banking platforms.”