Editors Note: In the upcoming 270° View blog series, we discuss the "wow" factor of digital banking. As digital savvy users continue to demand a personalized experience, with the right pieces in place, financial institutions can use big data to provide the 'wow' that their consumers demand. Today we discuss this, Brexit, England Soccer, humility and more!
Many of us watched in disbelief as a majority of citizens in the United Kingdom voted to leave the European Union. Any of us with stock market portfolios felt the sting of our global connectedness as our holdings took a hit in the days after the results of the Brexit vote were announced. Some of us, having been told by a British friend or colleague how much more in tune UK citizens are with the world and its diversity, saw this move to isolationism by the UK as a bit of comeuppance. Still, probably none of us would have believed that England's soccer team would lose to Iceland.
That said, we all would be well advised to practice some humility since our own economic situation (not to mention the American soccer team) is far from stable. Seven years after the great and most recent economic meltdown here at home, the US gross domestic product (GDP) is forecast to grow at 2.3%; and interest rates and inflation remain low as stagnant wage growth continues to dampen the demand for consumer goods and services. The outlook is far from certain as the US Federal reserve remains nervous, especially in the wake of the unknowns created by Boris the Blonde across the pond.
Add to this stew of uncertainty and slow growth, the decrease in investment in the FinTech sector. Last year was the hottest year on record for this sector with nearly $8 billion on venture capital flowing into it from across North America compared with $4.7 billion in 2014 according to KPMG. Venture Capitalists were not the only ones buying into FinTech as a number of the biggest banks placed bets themselves. In 2016, though investors in FinTech have become more discerning and more failures among start ups in the space have been noted.
However, the digital banking adoption continues to grow amidst all this havoc with 60% of the consumers in the US now using digital channels to access banking services. In addition, the demands of this group have not decreased. As various companies expand their digital businesses, consumers are fast becoming expert at weeding out poor UX wherever it grows. Customers of financial institutions have grown accustomed to companies anticipating "their needs and offering what they're looking for - sometimes before they even know what that is" according to Forrester.
Many retailers are already using predictive tools and algorithms to deliver this level of personalization while most banks and credit unions are far from ready to do the same. Mobile-only banks are taking advantage of this lag to stake their claim in the financial services landscape by giving consumers what they desire. As these neobanks multiply and the biggest financial institutions establish digital strategies that incorporate personalization. Digital execs at many regional and midsized banks are trying to ignite their own digital revolution inside their organizations.
Doing so will involve looking at some tactical actions - e.g. expanding the use of remote image capture to include drivers licenses, tax returns, etc. and using biometrics in places other than the smartphone, such as an ATM. But the real difference will come when digital banking execs take what they know about the power of data and apply it to the customer's everyday interaction with their bank or credit union. As Jim Marous recently noted at a luncheon in New Orleans, this is most likely to happen when financial institutions set aside the hype of big data and focus on the power of the immense amount of data they own about their customers. Then, personalization of digital banking services will become data driven in the truest sense, offering a number of specific ways to "wow" the digitally savvy customer.
We will talk more about how to get "wow" in the next 270° View posting. Meanwhile, we'll watch things unfold abroad and be humble since we have our own challenges to face (and a new national soccer team manager to select most likely).