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4 things FIs can do to stay ahead of fintech startups

It seems like everyone is jumping into the financial space these days. With traditional tech and fintech startups making waves, here are four ways traditional FIs can stay relevant.

4 things FIs can do to stay ahead of fintech startupsiStock photo


By Eric Brandt, senior market analyst, D3 Banking Technology

Major technology companies like T-Mobile and Apple, and retailers, such as Walmart, continue to make moves into the financial services landscape. Even though these entrants lack extensive experience in the space, they are looking to gain market share by offering seamless, easy and intuitive interfaces, and user experiences.

With the intensifying competitive landscape, financial institutions need to step up their game, especially when it comes to digital, or they risk losing ground to these newcomers.

The good news is, traditional institutions still possess a significant advantage when it comes to trust. According to a Harris Poll survey conducted on behalf of D3 Banking Technology last year, more than three-fourths of Americans (78%) feel more comfortable with their financial institution having access to their personal data when compared to a large tech organization. 

However, this advantage will only go so far, as convenience will eclipse security concerns every time. Community and regional institutions must respond to this potential threat by carefully assessing the digital experience they currently offer and making sure it's at least on par with what new entrants to the space are touting.  

Here are four things banks and credit unions can to do to stay relevant:

1. Ensure a smooth account opening process

A logical first step is to consider the account opening process. This is commonly the first interaction a potential customer or member will have with an institution, so it should be as easy, quick and frictionless as possible. Consumers should also be able to open an account in their preferred channel, which in today's environment is most likely digital. Consumers can sign up for the Apple Card or Walmart Pay from any location or device in only a matter of minutes. If your bank or credit union can't mirror that simplicity and convenience, you risk a high abandonment rate and many lost opportunities.

2. Personalize, personalize, personalize

Another area where financial institutions must evaluate their current performance is around personalization. Financial institutions have the upper hand when it comes to knowing their customers, as they have access to more meaningful and holistic data than any retailer or tech provider. But, determining how to best mine and leverage the data remains a challenge. Financial institutions that can strategically use their data to anticipate customers' needs and provide relevant offerings at the right times will strengthen relationships and positively impact their bottom lines.

3. Offer a plethora of helpful tools

An important extension of personalization is being able to provide customers with tools to help them better understand their financial situations and provide a more meaningful, tailored digital experience. Customers want their financial institution to help them budget, prepare for financial challenges and work toward major goals, such as buying a house or retiring. Institutions that are proactively offering helpful tools and catering to their customers' individual needs face a significantly decreased risk of consumers turning to third parties to fill this need instead.  

Banks and credit unions that have the agility to quickly introduce new products and services as customers want them will be best positioned to check these boxes and compete against all competitors, including nontraditional entrants such as major retailers and tech companies.

4. Designate a digital owner

However, doing so isn't simple — it will require an investment in modern, nimble technology and a long-term digital strategy that includes involvement from all areas of the institution. Financial institutions that designate a digital owner, someone with decision making power whose main responsibility is customers' digital experience and to plan for the evolution of digital channels including online, mobile and ATMs, often achieve greater success than those who leave that responsibility ambiguous.   

Banks and credit unions must regularly evaluate what aspects of the digital banking experience their customers and members prioritize so they can ensure they're putting their best foot forward with those features and functionality. To succeed in today's digitally driven environment, financial institutions must be able to provide a seamless, intuitive digital experience across all channels to gain market share and not only compete against other institutions, but new and emerging threats as well.






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