The digital transformation has changed how we live and work – and how we bank. Moving money in real time and paying bills on a smartphone are now commonplace but were unheard of innovations not that long ago. And yet, we are likely just on the edge of an era of rapid change.
From the internet of things to the explosion in fintech apps, how people can manage and move their money is evolving beyond traditional channels, which has important implications for financial services providers. And while most financial professionals acknowledge the value of digital engagement, 2016 provided ample evidence that delivering these financial experiences when and where people want them can have quantifiable bottom-line results.
With digital banking customers among a financial institution's most valuable consumers, keeping an eye on what's next in digital banking is important for enterprise-wide growth.
For instance, this year Fiserv found enrollment in online banking, mobile banking, online bill pay, person-to-person payments and account-to-account transfers had a positive effect on digital engagement, attrition and transactions at Bank of the West. A similar aggregated analysis of mobile banking customers saw an increase in product holdings and the number and value of debit and credit card, ATM and ACH transactions in the three months after mobile banking enrollment.
With digital banking customers among a financial institution's most valuable consumers, keeping an eye on what's next in digital banking is important for enterprise-wide growth. Here are three trends to watch.
When devices such as smartphones, appliances and cars are connected and able to collect and exchange data, it can lead to delivery of financial information wherever, whenever and however you need it. The always on, always connected world can bring financial management to every corner of people's lives, whether through Alexa-based banking or other alternative devices.
Those new connections will help consumers configure the type of information to send, whether it's actionable and where it should go. That may mean checking on bills to pay from the refrigerator or choosing from any number of other ubiquitous endpoints to help you manage your finances. We're likely at the tipping point of seeing what form those connections will take. The internet of things will have implications for delivery of a seamless, 24/7 banking experience, and as it matures, will influence authentication and sending of secure customer information.
The explosion of internet-connected devices highlights how quickly features and functions are coming to market – and the need to move quickly to securely and reliably meet consumer demand. There's an evolution in financial services software development and integration that enables faster, less disruptive modular updates, which facilitates more nimble delivery of innovations. For innovation from outside the bank's IT department, there's a movement toward application program interfaces (APIs) that enable integration with third-party services. These are private, more secure versions of the public APIs that enable connections between internet-based services, but give banking providers more control over how customer information is accessed and used. This idea will continue to gain steam as banks look to scale innovation through credible, approved third parties.
Both of these previous trends are at play when thinking about fintech partnerships. The prevailing idea has been that fintech and traditional financial services were at odds. However, rather than going directly at banking consumers, more fintechs are looking at banks as their partners. In areas like budgeting, payments and wealth management, innovators are creating apps that solve specific problems people have with their finances. Helping bring those innovations to scale is one of the reasons Fiserv partnered with Bank Innovation to launch INV, a fintech accelerator that matches nimble startups with traditional financial institutions. Partnerships like these help make innovations work within existing industry infrastructure and regulations. Even when they don't result in direct partnerships or products, these collaborations are successful as banks are eager to tap the IT talent and creativity that fintech providers bring to the equation.
Although 86 percent of millennials already use mobile banking, 71 percent of this generation believe mobile banking will continue to transform their banking experience. Great changes are happening in digital banking – innovations that will likely take shape in ways we may not expect or be able to plan for. To take advantage of coming innovation, we all must be ready to move quickly.
Interested in learning more? In the coming weeks, read more about trends in lending, payments, risk and fraud, wealth management and retail banking on The Point.