This week we interviewed Jim Marous, owner and publisher of the Digital Banking Report and co-publisher of The Financial Brand. Marous recently released the 2016 Retail Banking Trends and Predictions report, where he and his team present highlights from their panel of nearly 100 financial industry global influencers. The report is worth downloading in full, which you can do here.
In this interview we talk about the report, how customer service has changed in light of digital technology, what the ideal digital bank would look like, and what excites Marous when it comes to the future of banking.
What were the most common predictions in your retail banking trends report?
The number one prediction was that fintech firms and legacy banking organizations will collaborate more frequently.
This collaboration reflects the increasing need for banking to digitalize all aspects of the business model and the need to meet the demands of the digital consumer.
The second most mentioned prediction was that capturing and using consumer insight will increasingly be a differentiator for organizations hoping to build new relationships and solidify those relationships already in place. Consumers will expect their financial institution partners to be able to provide real-time recommendations based on changes in their financial profile and the ability to use advanced analytics for this purpose will be imperative.
What are the components that make for good fintech/bank partnerships?
The most obvious complementary factor is that fintech firms need the scale of consumers that the banking industry already possesses. With a much longer tenure and scale, banking firms also have the reputation of stability and trust as well as experience navigating the myriad of regulations and compliance requirements. Lastly, the banking industry has the capital that is the lifeblood of any growing fintech firm.
Alternatively, banks are severely constrained by legacy systems that can stifle innovation and the ability to be agile. Beyond the obvious challenges of working with old systems, this inhibits the ability to recruit the level of technological expertise needed to improve products. Fintech firms bring this agility and commitment to innovation to the table.
What is the biggest disparity between what financial institutions say is important and what they actually invest in?
The ability to take advantage of the benefits of marketing automation and personalization is a major challenge for all sized organizations according to our Guide to Financial Marketing report. This represents a customer experience “perfect storm,” as consumers are demanding that partners in their daily lives know them, look out for them and reward them as individuals, yet most banks and credit unions are not budgeting or committing to this requirement.
According to this year’s survey, the challenge is especially acute for community banks, that appear to lack the resources and are not prioritizing for the reality of needing to become a digital bank. As we mention in the report, consumer expectations are being set by other industries and the bar is getting higher every day.
How has the definition of customer service changed in light of new digital technology such as smartphones?
No longer is consumer advocacy limited to ‘being friendly’ in the branch office. Organizations in every industry are judged by their ability to make the consumer’s everyday life easier. For the banking industry, this means that the financial institution must be able to deliver an easy to navigate, seamless digital platform that goes far beyond a miniaturized online banking offering.
Not only does transactional friction need to be removed, but the consumer expects proactive advice and notification that will help them manage their money better than ever before.
I like to use the analogy of traditional banking providing a rear-view mirror perspective of where a consumer has been, while today’s banks and credit unions need to provide tools similar to a financial GPS system, including financial directions and helping the consumer avoid the roadblocks and challenges that may be in the future.
What can banks and credit unions do to make the banking experience simpler? What companies should they pattern after?
Bankers and credit union executives need to look no further than the applications they enjoy using the most on their own smartphone. In many cases, we choose to use those applications that are well designed, integrated, that remove unnecessary steps and provide a truly positive experience.
While the Uber, Apple and Amazon examples have almost become cliché, they each use well designed interfaces to simplify a consumer’s life. Each integrates advanced analytics to provide solutions in real time integrating consumer recognition, payments, offer recommendations, contextual engagement, and even satisfaction measurement.
What would the ideal digital bank look like?
There are several different ways to build an ideal digital bank. A true digital bank is built on the value proposition that most products and services are delivered digitally. Its customers expect to use digital channels for their day-to-day banking activities.
The digital bank’s infrastructure is optimized for real-time digital interactions and its culture embraces the rapid change of digital technologies. Paper and friction in most processes are removed. An ideal digital bank may be a subsidiary of a legacy banking organization, a separate brand, a separate channel or a digitally native bank. The goal is to achieve economies of scale, an exceptional consumer experience and to support a complete product line.
Interestingly, an ideal digital bank may still have a modest branch network, but even that channel leverages digital technology for improved delivery. Most likely, the digital bank of the future will be a retailer of financial solutions from dozens of internal and external providers. Serving as the financial solutions ‘hub’, the ideal digital bank will leverage their scale of customers to provide the best of breed of services from within the organization and from partnered fintech firms.
What are you most excited to see in 2016 when it comes to banking?
For me it is simple. Having been in the banking industry for almost four decades, I get more excited to see what firms actually begin to ‘get it’ as opposed to looking for any megatrend or innovation.
While trends and innovations are definitely headline grabbers, I am looking forward to seeing those organizations who can ‘put it all together’ and provide a platform that serve the consumer and their banking organization. I love what Moven and BBVA are doing as well as firms like mBank and several of the challenger organizations in the US and UK. I also get excited about what may not have been in my original scope of thought.
Maybe it is a major tech company like T-Mobile leveraging their consumer base and network of offices to ‘become a bank,’ or maybe it is a small community bank that invests in the technology to become a digital player among the big boys — either way, it’s a matter of creating
Trying to predict the future is difficult at best. I’m just sure that next year at this time, the financial services landscape will be much different than it is today.
Named as one of the most influential people in banking and a top 5 Fintech influencer to follow, Jim Marous is an internationally recognized financial industry strategist, co-publisher of The Financial Brand and the owner and publisher of the Digital Banking Report. Marous advises on innovation, portfolio growth, customer experience, marketing strategies, channel shift, payments and digital transformation within the financial services industry.
As a sought after industry speaker, author and recognized authority on disruption in the financial services industry, Marous has been featured by CNBC and CNN, The Wall Street Journal, New York Times, The Financial Times, The Economist, The American Banker, Accenture and the Irish Tech News and has spoken to audiences worldwide.