How FIs Can Provide Amazon-Like Digital Banking Experience

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Amazon was one of the pioneers in leveraging data associated with consumer purchases online to order to market and cross sell additional products and services. One could argue that financial institutions have even more data about their customers than Amazon has about their shoppers.  This data can help banks and credit unions to win wallet share, increase loyalty and gain access to new generations in need of financial services.

However, with disparate digital channels (see Do You Know What Your Digital Strategy (Or Lack Of One) Costs Your Organization?), accessing this information about the customer becomes exponentially more difficult as data is stored in different locations on different platforms.  These “data jails” are made even more impenetrable by the fact that many financial institutions have outsourced control of their brand, the user’s experience and associated data to third-party vendors using single sign on strategies. I always am amazed when I see financial institutions actually allow some of these providers to “brand” the FI’s website with their logo.  The logic of this escapes me and seems a clear dilution of the banks’ or credit unions’ brand value.

One place it has become an accepted industry practice to surrender the user’s experience and data is in the area of money movement.  By outsourcing bill payment, P2P and even A2A, credit unions members are presented with the task of going to multiple screens, each with a different UI and thus FIs lose access to the data that could be used to have a positive impact on their top and bottom lines. 

One strategy that banks and credit unions are using to regain control of the user experience and associated data related to money movement is to utilize APIs to connect with their third party providers. Taking this approach allows financial institutions to send only the information required by the vendor to execute the desired action.  In addition, the user is presented with a much more consistent, intuitive experience that can include value-added options for which the FI can charge a fee.    For the institution, this approach offers an opportunity to discover routing options that will lower costs.

One institution I work with decided to take back control of the user experience and data for their bill payment offering.  This made new data available that showed the institution was its own single largest bill pay recipient.  Each month it was paying five figures to the bill pay provider who was sending paper checks to the FI so that its own customers could pay the mortgages held by the FI. 

In addition to the costs associated with surrendering data to third party outsourcers, banks and credit unions also struggle to access data hidden in the siloed, point and legacy solutions within their IT infrastructures. This limits their ability to provide the level of customer service they otherwise could with an integrated platform to analyze data in an automated and intelligent manner.  Organizations that properly leverage such an approach for their digital customers can better predict and personalize their offerings to members, fostering deeper member relationships. 

Accessing this data and then analyzing it for the purpose of personalizing financial services for the customer involves taking a strategic approach to a bank or credit union’s digital services.  There are several options for how to implement such a strategy successfully.  The next blog will focus on those options.