The traditional banking model and business roadmap for financial institutions needs future-proofing.
Across today’s financial services landscape, digital increasingly rules the roost — making prioritizing innovation important for long-term success.
Staying relevant through innovative services and holistic convenience is frequently the best way to stay in business. Last week, Bank of America launched a “massive update” to its mobile banking app, combining banking, investing and retiring into one unified app.
The new, unified digital platform from Bank of America consolidates into one mobile app what had been five different apps: Bank of America, Merrill Edge, My Merrill, Bank of America Private Bank and Benefits OnLine. It also brings several digital tools together in one place, including Bank of America’s Life Plan and Net Worth Estimator Tool offering.
The move comes at a critical juncture, as the pandemic forever changed consumer expectations from their banks, The rise of digital and embedded banking services and nonbank platforms has resulted in the commoditization of many banking products, creating a need for traditional banks to focus on fully owning the customer relationship with their clients and customers through personalized and relevant services.
After all, the very definition of what a bank is — what it does and what it can do — is changing. The downstream result is a contemporary financial services landscape that is competitive. Effective innovations can give firms a winning edge in the market.
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Against the backdrop of today’s landscape, banks are expected to operate with cost efficiency and robustness without making any mistakes. That alone is a difficult task. But banks are also expected to focus on innovation and growth as well as produce personalized services for every customer — and these two expectations can often be at odds.
In today’s digital age, where a seamless and convenient experience across various touchpoints has become table stakes, particularly within financial services, prioritizing innovation is critical to sustainable success.
Innovation can open doors to previously untapped markets. For example, younger generations are often more tech-savvy and inclined toward digital banking. By offering innovative solutions that cater to their preferences, banks can attract potential customers who may not have considered traditional banking options before.
“Historically, it was just banks competing with banks,” William Artingstall, global co-head of cross-border payments and receivables at Citi, told PYMNTS in October. “But increasingly, FinTechs and other disruptive entrants are leveraging solutions … innovations and competitive offerings … which can be costly and complex for banks to quickly stand up.”
PYMNTS Intelligence’s “Growing Credit Union Membership via Lending and Omnichannel Banking Innovation” revealed that 81% of credit union members look for innovation when shopping for a financial services provider, while 74% of non-credit union members said the same. Eight percent of credit union members said they transitioned to credit unions because their financial institutions failed to meet their innovation expectations.
See also: The Cost of Legacy Payments in Light of Innovation’s ROI
It is becoming increasingly important for banks to use data analytics and artificial intelligence to offer personalized experiences to customers.
As NCR Voyix President Doug Brown told PYMNTS this month, helping banking clients deliver an omnichannel experience rests on real-time data. Personalization is paramount so data can help the banks be aware of what the customer wants and when, while setting an action plan to address the banking client’s concerns even before they set foot in the lobby.
Through insights gleaned from transaction histories and user behavior, banks can tailor product recommendations, financial advice and promotional offers to individual preferences and needs. This level of customization enhances customer engagement and satisfaction, fostering long-term relationships between banks and their clientele.
As technology continues to evolve, so too will the landscape of online banking. The rise of mobile banking applications, digital wallets and contactless payment methods exemplifies the ongoing innovation in financial services. Additionally, emerging technologies such as AI hold the potential to further revolutionize banking by facilitating secure and transparent transactions.