With the new year upon us, many are thinking about what the next year might hold for the financial services industry. We wanted to share our predictions on how digital, AI, and personalization will transform the financial industry in 2019 and how banks and credit unions will aim to improve customer and member service with better digital features and analytics.
- Intense competition among banks and credit unions: Competition in the financial industry will continue to be strong and it is important for banks and credit unions to advance their offerings to maintain customer and member relationships. Large tech companies will continue to set the standard for consumer expectations, however, banks and credit unions of all sizes must follow suit.
- Leading financial institutions will take back control: 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). However, these third parties often provide an inconsistent user experience. In 2019, banks and credit unions will work to regain control of these elements through modernizing their digital banking platforms.
- Credit unions and community banks will reevaluate their competition: More credit unions and community banks will continue to realize that they cannot just rely on customer service and knowing their customer but that they have to compete digitally as well. To compete, these institutions will work towards a sustainable and competitive digital transformation strategy, focusing on updating/replacing existing, legacy online and mobile products.
- More financial institutions will establish digital owners: We've reached an inflection point where digital channels are more popular than branches. In addition to branch managers, they also now require digital owners or someone with decision making power that can manage and support the digital channels. Banks and credit unions must designate an executive-level digital delegate who focuses solely on the digital experience and roadmap. Financial institutions not already considering this, with strong commitment and buy-in from the entire organization, are at risk of falling behind.
- 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%) consumers want their financial institution to anticipate their financial needs the same way other online retailers do. Even though this has traditionally been an area where bank and credit unions struggle, there is good news - more than three-fourths (78%) feel more comfortable with their bank or credit union having access to their personal data than a large tech organization. Financial institutions must have this trust to find ways to anticipate needs and provide timely and relevant offerings to customers and members in 2019.
- Regional and community financial institutions will turn digital from a hindrance to a differentiator: Our survey found that 58% of consumers reported they'd rather bank with a community/regional institution over a national one. However, of those that would choose national, 42% said it was because they offer a better digital banking experience. This data makes it clear that consumer 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. Those that don't join this mission in 2019 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 buzz word to a tangible way to serve customers and members. This enables banks and credit unions to have productive and relevant conversations with their customers and members. However, in order for this to be successful, financial institutions must appropriately leverage 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, may of which will seal their fate according to their access to consumer information.
Based on our predictions, the next year focuses on financial institutions working diligently to transform the consumer experience, enhance the digital experience and find ways to incorporate personalization and AI into their digital banking platforms. Stay tuned to see how these predictions affect the industry!