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The recent Bank Customer Experience Summit in Chicago brought together several of the largest financial institutions and payment technology providers to discuss the changing financial service landscape. The challenges facing mainstream financial service providers included adopting technology preferred by younger consumers while maintaining services preferred by older consumers, transitioning to a lower cost branch network model and maximizing smartphone capabilities to make mobile banking faster and easier for all customers.
Citibank and BMO both presented their plans to upgrade their branch network to make banking more accessible and efficient. The core of the efforts to modernize retail branch banking is increasing the functionality of ATM’s and making the environment more inviting for broader age segments. BMO outlined plans to have video tellers that they see as combining the traditional retail banking experience with smart technology, whether the target millennial consumers will appreciate this advancement will be interesting to see going forward. The reinvention of retail branch banking will most certainly result in fewer traditional locations but should also be coupled with expansion of ATM’s with greater functionality. Consolidating retail branch networks could significantly lower operating cost that could be utilized in development of mobile platform technology that is having greater traction among millennials.
There was a consistent focus at the summit on going to where the customers are, or rather where they spend most their time; on mobile devices. What was a distinguishing factor a few years ago, financial institutions overall digital platform now a requirement that will only increase in importance going forward. The success of ‘online-only’ financial institutions shows the demand among consumers to limit their interactions with their bank, and be able to monitor all their transactions as they happen on their smartphones. Another look at mobile banking illustrated that not only is a requirement for banks, but it is an environment where they are not only competing with other banks applications, but with all applications the consumers interact with. This has led to even greater expectations for simplicity, speed, and security. Not only does this make a higher technology standard for banks, but it also increases the potential that success in the space could drive greater interaction with customers where more financial products and services being adopted.
There was also discussion of what role financial institutions have in the transition to digital and mobile payments beyond the mobile phone handset providers. Consumers that are embracing mobile payments through ApplePay, Samsung Pay and others may be just as likely to adopt a similar platform from their bank if the same functionality is available. However, this could serve to disrupt the traditional payment space that is composed of many existing partners, so there needs to be a balance in terms of platform creation versus partnership. The cost of processing cash is significant (Bank of America estimates that up to US$1 billion could be saved annually from moving away from cash), and banks are well positioned to encourage alternatives. The financial institution that is best prepared for this transition will benefit the most among younger consumers that see little difference in paper and digital money.