Aside from consumer behavior and expectations, one of the main drivers for 2017 and beyond, that is shaping the consumer finance industry's advances in digitization is the FinTech presence. Finance and technology are colliding at a faster rate than the industry has seen before. A PwC report shows the sectors most likely to be disrupted and the consumer banking sector is at 80%, the most likely sector to be impacted by the technological advancements encroaching the industry.
Source: PwC Global FinTech Survey 2016
Traditional banks and credit unions are forced to make choices that will allow them to remain competitive in the marketplace and ask themselves: How do we deliver a mobile-first approach that will improve the customer experience?
When building or buying a mobile and online platform there are basic technology requirements all institutions look for, but innovativeness goes a long way in today's marketplace. I have compiled a few of the most notable approaches that legacy financial institutions may want to put on their radar with the ever changing competitive landscape of the new year and beyond.
Leveraging Location Services
Every time I start my car my smartphone tells me where I am going, how long it will take me to get there and the fastest route available. This is slightly creepy, but useful. In a study performed by xAd which is geared towards the purchase behavior of the retail shopper, research found that "2 out of 3 consumers in the US are making trips into stores to complement their mobile research, a 20% increase from just one year ago."
Source: 2016 xAd, Inc., Mobile Path To Purchase The Global Retail Shopper
Innovated approaches to a consumer's location can allow financial institutions to leverage these somewhat eerie capabilities and turn them into portfolio growth. Think of car shopping at a dealership and receiving a text from your financial institution that you are pre-approved for a car loan up to $45,000, or imagine yourself at the furniture store browsing for a new living room set and a personal line of credit up to $15,000 is at your fingertips. Accessibility to your current account holder base through location services is a relatively new tactic to the mobile-first approach but is becoming a popular method across industries.
Speed is Crucial
While being present in the mobile world is good, without speed driven by a robust backend solution, a consumer's demand for an instant response cannot be met. This can result in lost opportunities. Even if that response is a denial they want to know and they want to know now. To support this demand financial institutions are required to deliver easy to use technology including, the ability to support the consumption of data in a new way (such as driver's license scanning capabilities and prepopulating data from multiple external sources) and owning a strong backend decisioning engine. The frictionless experience is a popular topic (I could author numerous blogs, white papers and webinars on frictionless banking alone), but for good reason as consumers have come to expect it.
Personalized Services and Products
Being in the consumer’s pocket (pun intended) can be extremely powerful especially when it comes to cross selling as it opens the door for additional products and services. To take advantage of this position valuable consumer data should be leveraged to automatically interrogate and present tailored products and services relevant to the consumer's behavioral history, demographics and generational needs. Contributing to the race to remain competitive, the growth of current account holders through cross selling can keep you in the game. Just keep in mind not to jump on the Wells Fargo train. Financial institutions should be demanding technology that can provide these personalized, pre-approved capabilities.
Now I may be looking out a bit with this one, but hear me out. In today's world we can talk to our smartphones for functions like sending emails and text or to look up movie times. We can talk to our television remote and have you heard of Google Home or Amazon Echo? There are some major technology companies that are defining consumer's expectations and behavior. This trickles down to the retail world including the financial services sector. It won't be long before it is expected to provide voice recognition technology for banking tasks effectively (albeit slowly) pushing out branch and online channels. This leads me to my last and most important topic….
Open Application Programming Interface
Application programming interfaces available within a technology solution provide a scalability and extendibility that can serve as the foundation for many financial institutions looking to remain competitive. Boxed into the technology capabilities of one provider is a limiting option currently and especially moving forward. With an easy to use API, innovative offerings to support emerging market demands like the examples covered in this article become more attainable. A single financial services technology partner will not encompass all of the tools to meet consumer's behavior; however, access to an API can deliver these needs.
The race to deliver a mobile-first approach charges on as we start this new year. Working closely with many financial institutions on a daily basis I see first-hand how each organization is striving to catch up to the standards set by some of the major technology companies such as Amazon, Apple and Google. How will your financial institution remain competitive?