What’s coming for the financial institution? A better question may be – what’s already happening. Today, next-generation banks are providing a streamlined, more efficient, and more Millennial-friendly way of banking. You’ve heard talk about it before, but what is happening and why? More so, what do you, as a bank leader need to know to ensure your company doesn’t lose ground in the process?
Navy Federal Named Best Overall Online Banking Leader By Javelin; BBVA Compass, Citibank, SunTrust and USAA Garner Financial Management Praise
Navy Federal, USAA, Bank of America, Citibank, BBVA Compass, Bank of the West, BMO Harris, SunTrust and PNC lead the pack in the inaugural edition of Javelin’s Online Banking Scorecard, a competitive analysis of the nation’s top 30 retail banks and credit unions. Navy Federal Credit Union earned the 2016 Best Overall Online Banking Leader award while being awarded 67% of the total points possible. Javelin's scorecard assesses more than 200 features offered by FIs across the categories of Financial Management, Money Movement and Customer-First Banking, the latter encompassing personalized guidance from product selection to financial well-being.
Banks are beating credit unions in mobile banking utilization and it’s not even close. As a group, banks with a mobile app boast 27% enrollment whereas credit unions stand at 12.6% enrollment. In an age where mobile banking has a huge impact on overall customer satisfaction and plays a vital role in capturing the millennial and emerging affluent segments, the quality of one’s mobile offering is crucial. Moreover, increased mobile banking usage drives improved financial performance for FIs. A successful mobile banking app drives customers to a lower cost channel; Chase cites a cost of 65 cents for each teller deposit vs only 3 cents using mobile. As big bank customers have flocked to the mobile channel and become less dependent on in-person interactions, that has allowed these institutions to eliminate branches and reduce cost structure.
This week we talked to Zaydoon Munir, the founder & CEO of RevolutionCredit, a company that uses behavioral data to help consumers and financial companies interact with each other more effectively.
In the past five years the percentage of weekly mobile banking users has more than tripled — from 9% in 2010 to 30% in 2015 — while weekly branch visitors fell from 40% to 24% in the same time frame. 2015 marked the first time that weekly mobile bankers (30%) exceeded branch bankers (24%) in Javelin’s survey. “What is driving this incredible growth? Smartphones and tablets are gaining rapidly in consumer adoption but it’s also a function of the fact that mobile banking services have not only proliferated but increased in the quality and features they offer consumers,” said Javelin analyst Daniel Van Dyke during a January 27 webinar reviewing the firm’s Mobile Banking, Smartphone and Tablet Forecast.
Many community banks and credit unions have become primary FIs in name only as a significant number of their customers turn to secondary FIs for credit cards, mortgages and other loans. This "silent churn" —where customers open up a checking account with their primary FI but buy other banking products elsewhere — is a profit killer that poses an "existential threat" to community banks and credit unions. Javelin presents these findings in its latest report, Bank Switching: Combating 'Silent Churn' To Maximize Primary FI Status. "In a way, it could be said that consumers are 'cheating' on their smaller FI primary relationships with secondary relationships that are transactional and commoditized," writes Javelin. "Unfortunately, this behavior is centered on the most profitable loan products."
If history is a sign of things to come (and it is, as you’ll see below), companies that ignore fintech do so at their own peril. Luckily, there’s still time to get ahead of the curve and start innovating. Forward-looking financial institutions will reap rewards for years.
Technology affects nearly every aspect of our lives. Almost everyone has shopped online, found entertainment online, even dated online – shouldn’t the banking industry also be digital? As consumers we expect everything to be available digitally, providing on-the-go access to fit our busy lives. This digital shift is pressuring even slower-moving industries like banking to accommodate.
In his American Banker article “There Will Be Blood: The Era of Engagement Banking,” thought leader Bradley Leimer discusses the future of the banking industry. Leimer suggests the next big challenge facing the industry is the full-on shift to a mobile platform. He goes on to say that the economic imperative to innovate and shift has finally come to an industry not known for innovation. Inspired by signs of mobile adaptation, an entirely new financial market and business model emerged — financial technology, or fintech for short.