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February 14, 2022 | 20min read
Redefining Primary Banking Relationships in 2022 and Beyond
Last week, MX’s Chief Industry Strategy Officer, Don MacDonald, sat down with Mark Schwanhausser, Director of Digital Banking at Javelin Strategy & Research, to discuss three important trends for 2022 and beyond that will redefine primary banking relationships:
The battle for share of minds
Consumers today have more banking options than ever before — from traditional banks and credit unions to neobanks and technology companies. In 2021, Javelin Strategy & Research found that 52% of all financial relationships for consumers are with nonbanks. And, this will rapidly expand because of the growing wave of Gen Z and Millennials, who hold about two-thirds of their financial relationships with nonbanks.
To compete for a share of minds — not just wallets — in the future, financial institutions should focus on changing their approach from just a safe place to hold money, to also developing relationships. This means improving user experiences, going beyond transactional activities, and leveraging data to proactively engage with customers to support their financial fitness.
APIs threaten to impede
As banks seek to embrace new innovative tools and functionality, the challenge will be to avoid creating a fractured experience with bolt-on features that don’t drive a seamless, personalized experience. Financial institutions should focus on integrated experiences that build a sense of trust and partnership so that consumers see the value of that relationship rather than picking their new product based on rates or fees.
Financial fitness as a differentiator
Financial fitness is the area where we truly can differentiate banks and credit unions from one another. This consists of investments in several areas, including nurturing savings habits, harnessing data to create a comprehensive view of finances, helping build borrowing power, leveraging gamification to drive behaviors, and delivering personalized insights.
“Banks typically are about holding money and moving money. And, that’s a transactional relationship. But a growing number of consumers say they want more … Banks aren’t fulfilling that.”
Banks need to change the paradigm from a task-oriented approach to instead trying to generate a more modern, digital solution that enables consumers to improve their financial fitness. Essentially, they need to solve financial headaches, not create them.
Watch the full Javelin Strategy & Research discussion with MX at 2022 Digital Banking Trends and Predictions.