Covid has taught us that waiting for the right time to digitally transform banking is no longer an option. While access to branches continues to be restricted, in order to serve customers financial institutions need to continue providing an exceptional digital banking experience.
Almost every organization worldwide had to react fast to protect and prepare their business during Covid-19. Within a short timeframe, they had to equip their teams to work remotely and collaborate and innovate through technology. While banking was already evolving before the pandemic, Covid-19 created an immediate need for digitalized banking. The once traditional way of banking became digitized and staff and customers alike embraced and adapted to the change and it will continue into the future.
As the population grows, new banking customers are emerging. What will banking look like for them six months, a year or 10 years from now? What will future generations expect from their banking experience? Will the account holder want to go back to their old way of banking as the economy reopens? In reality, this demographic uses digital for everything in their lives – they don’t expect anything less from their bank.
In The Future of Work in Banking, Jim Marous, CEO of The Digital Banking Report, says: “Why would banking, or any industry, move backwards once the potential for digital transformation has been realized? Why would a financial institution require a customer to visit a branch to complete an account opening or loan application? Why wouldn’t organizations move forward in the collaboration of humans enhanced by advanced technology?”
Dan Rosen, Founder and General Partner at Commerce Ventures, said in a webinar: “It’s interesting if you think about the chronology of it – we had the 2008, 2009, 2010 financial crisis and it just so happened to be occurring right as the Gen Y population in the United States was coming of working age. As a result, it created a consumer base that fundamentally had scepticism about the traditional institutions of banking.”
In the same webinar, Brandon Dewitt, Co-Founder and CTO at MX, commented that while during the 2008 financial crisis every Gen Y banking transaction was immediate, they are now making larger investments. They are more interested in developing a relationship with financial institutions as they want to know what products they have to offer to meet their needs.
Before Covid-19, branch traffic had already reduced significantly. Last month, Wealthfront reported that “Over 30% of our clients surveyed haven’t visited a bank branch in at least a year.” Due to the pandemic, since mid-March 2020 customers have wholly embraced digital banking and they are seeing the benefits.
In The Financial Brand, Jim Marous said: “Improving online and mobile banking capabilities is only the tip of the iceberg, however, as most banks and credit unions reassess their entire technology infrastructure in light of COVID-19. After years of relative complacency, financial institutions are being forced beyond their comfort zones, knowing that advanced technology must be embraced across the organization to meet performance objectives in the future.”
There is an increased opportunity for innovation and digitalization in banking into the future. Community banks and credit unions are experiencing greater efficiency, more engagement with teams and delivering better customer experience.
When we consider the future of banking, there are two standout factors – digitization and keeping it simple. Access to banking is fundamental – every single customer engages with fintech daily. Everything in their lives is linked to financial transactions – the bicycle they ride, the car they drive, the coffee they order, their Netflix subscriptions; the list is infinite. Yet, customers today are short on time – they don’t want their banking to be complex or have too many choices. They require convenience and efficiency. They want their financial institutions to know them so well that they know their banking needs and are proactive about letting them know their options.
Covid-19 is stressful and complicated, banking doesn’t need to be. The old way of banking is fast becoming seen as unnecessarily time consuming. The habits and preferences of banking customers during and post-Covid are likely to have changed for good.
Almost overnight daily banking habits changed. Yet, customers needed access to and reassurance from their banks more than ever before. Through digitization, financial institutions were able to respond immediately – they acted fast and delivered an exceptional essential service to their customers, despite the restrictions. They went above and beyond to maintain the same level of service, without face-to-face interaction, through digital channels.
Community banks and credit unions have a personal connection with their customers and they understand the strain that Covid has on them. They know that their customers are fearful and less likely to visit their branch. Since March 2020, they have continued their service through digitization and ensured their customers have the bandwidth to access banking. Banks are giving customers the tools to access essential services, despite Covid.
How do you keep the lines of communication open when branches are no longer accessible and operational and human interaction is no longer possible? Communication and interaction are at the core the relationship between financial institutions and their customers. Community banks and credit unions know their customers so well that they give them access to services they need without them having to ask. Through digital banking, they have full access to the services that they need when they need them at their fingertips.
For more insights, connect with Sarah Martin, CEO at Pulsate, on LinkedIn here.