71% of Millennials prefer going to the dentist than a bank. This fact is enough to give you an idea of something that most people probably already know; Millennials don’t like traditional banks.
Today, the ongoing COVID-19 pandemic has steadily expanded this demographic to beyond Millennials; senior citizens are also reluctant to visit bank branches, and even their younger counterparts like Generation X are avoiding activities like ATM visits, cash deposits and similar tasks that require their physical presence. This directly supports the significant rise in popularity of FinTech applications and the perpetual traction this industry is experiencing around the world in 2020. FinTech companies are delivering intuitive products & services that capitalize on the different generations’ discontent with conventional financial institutions and legacy banks, giving them an alternative to fall back on whenever and wherever their expectations aren’t met.
Although this presents a clear threat to traditional banks, it also presents an obvious opportunity. FinTech is here to stay, so banks and other FIs could easily adapt their strategies to encompass FinTech applications or even merge and establish mutually beneficial partnerships with the rising tide of digital finance entities. Financial houses that are concerned with improving their customer experience and staying relevant in digital times will be in a solid position to either fight back or join the FinTech movement. Let’s look at four potential ways that that can happen.
1) Quick & Easy Money Transfer Apps
Money transfers from your personal account to another is a process that has its own frustrations, and we’re all too familiar with it. Today, although the process is much faster because of technology and all it brings, consumers can still face difficulties in using tech found at their traditional banks. Here the peer-to-peer (P2P) platforms have greatly simplified the speed and convenience of this operation, allowing quick transfers between accounts and easy exchange of finances for people to pay each other back on the spot. Moreover, traditional banks are coming up with intuitive digital solutions that aim to mimic the speed, efficiency, reliability and ease of P2P payments, largely supported by their robust infrastructure and secure payment systems that are significantly improving over time.
This experience is mostly all that Millennials expect in today’s finance world. Banks and similar FIs are slowly realizing this shift in their industry, although they still need to catch up faster and be more flexible in adopting various innovative FinTech concepts.
2) Chatbots and Text-Based Payments
Chatbots and text-based AI assistants are going strong in an increasingly demanding digital world, where consumers wants speed and convenience at every turn. Today, people can pay for products by texting sellers directly their phone’s messenger app.
As we progress into the future, consumers can expect all banking brands to have their own AI assistant or Chatbot. Today, customers can have a conversation with Chatbots on many digital platforms across a lot of industries, and in finance Chatbots update customers automatically with a variety of notifications and important messages.
3) Leave the Card, Pay with Phone
Although brick-and-mortar stores still exist normally, their payment options are up to speed with the FinTech world. Various platforms now allow you to link a credit/debit card to your mobile or wearable. This shift in behavior is bound to impact banks and other FIs, in terms of customer expectations and trend-setting. And with the global mobile payments market estimated to hit $3.4 trillion by 2022, traditional institutions should keep a close eye on this aspect and should try to integrate with this trend.
4) Smart Budgeting & Personal Finance Management
Before digital finance, banks were the go-to place that people considered for managing their investments and growing their wealth, which automatically meant the natural selling of investment products to those customers. Such services can give consumers an easier way to stay informed of their financial decisions by connecting their spending behavior to their application via their bank account, meaning you can see how much money is spent on what and where, for a better self-monitoring experience and therefore better saving behavior and spending efforts. This notion has taken even more of an upturn during the global pandemic, as more and more users flock to smart financial solutions on their devices to curb the threat of going to banks to manage their finances and investments.
Banks and FIs should know how their similar services stack up against FinTech solutions, to determine the best way forward for customer retention and increased loyalty, and even for acquiring prospect customers frustrated with another traditional bank’s poor finance management experience. Banks will need the digital aspect of finance in order to properly and efficiently integrate similar services into their upcoming strategies.
Innovative FinTech applications will keep on coming, and banks are at a crossroads that will determine their way forward. The looming threat of losing current customers or potential new ones is there, but these institutions are not completely helpless to that risk; they need to focus on what matters the most in that equation: the customer. Customers today are looking out for their health and wellbeing, and banks need to meet these expectations with a steady flow of innovative FinTech products that keep customers satisfied.The more conventional FIs understand and adapt to the motivations and expectations of their customers, the easier it will be for them to alter their existing strategies to remain relevant and competitive in their own right. Listening to customers’ feedback is crucial to ensuring a satisfied base by offering what they are looking for in today’s digital world.
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