The banking industry has reached a point where change is necessary, that with online consumer demands, new technology and a changing economy, but some are still uncommitted to the transformations necessary to keep up in the modern economic landscape.
Despite resistance for adapting to the current reality banks must future proof themselves and get out of their comfort zones to deliver what today’s customer demands. This goes against everything a legacy financial business has lived by, and why bank executives have only partially committed to the way the industry will operate moving forward.
For those who are looking to make the changes, but are unclear where to begin, here are four growth strategies you should consider to advance in today’s digital world.
Expand out of the core business model
Banks must be willing to test new ideas and products. They must offer customers more than just the traditional banking service experience. Maybe it is accounting, maybe it is money management advice, or a digital money tool. Modern banks can do things like this by collaborating with startups. Citibank, for example, scans thousands of startups each year.
As the Innovation in Real Estate 2018 report stated: “Large companies have not been built to respond to the accelerating pace of change in a timely manner, and that short of restructuring the entire organization from the ground up (a big, hairy and audacious goal), partnering with startups who are unencumbered by bureaucracy, short-term shareholder demands and employee incentives, is an easier way to tap into emerging technologies, business models and talent.”
Utilize the nimble nature of startups and be open to adopting an agile business model.
Produce a memorable customer experience
The reason many in the mortgage industry believe the job of a loan officer won’t be made obsolete is because home buyers still truly do, and always will, appreciate the advice and expertise of a professional. Buying a home is a huge financial commitment and a buyer wants to speak to a real person during that process.
However the modern consumer has mass amounts of information available at the touch of a button, so companies must learn how to leverage that and also build a stronger customer experience at the same time. Banks should consider using technology to make the process more fun and engaging. Show the customer that you care about what they are feeling during transactions, don’t just give them a service with little to no communication and send them on their way.
“It’s all about high tech and high touch.”
For example, today’s marketing campaigns are about experience, emotion and delighting customers. The Tempkin Group reported that individuals who have a positive emotional association with a specific brand are:
- 8.4 times more likely to have a built-in trust for the company.
- 7.1 times more likely to buy more from that company.
- 6.6 times more likely to not let a mistake by the company dissuade them.
Offer innovative solutions through third parties
Though a bank would need to make sure it can deliver this in the right and secure way, it is time to work with third parties to deliver for customers. Speeding processes up is where this comes into play. We are a society that wants change and progress to happen quickly – banks have traditionally been the opposite of that.
The startup Petal, for example, has established a way to offer credit to those who don’t have much of a credit history by using technology that makes underwriting decisions in real time based on a larger (digital) financial index of that borrower, rather than a snap judgement solely based on more traditional processing and underwriting methods.
Banks must work with companies like these to deliver for their customers.
Deliver an all-in-one financial solution
Delivering on the highlighted growth strategies could result in a consumer not having to go anywhere else for their financial needs. Developing a “super center,” all-in-one banking experience will promote growth for the bank while accounting for all of their customers’ needs.
The bottom line is that banks must commit to seeking out problems proactively and solve them in unique ways for the benefit of their customers. By constantly seeking out new opportunities and creating new solutions, banks will future-proof themselves.