‘Tis the Season for Banking Trends and Predictions
Now is the time of year for everyone to be talking about banking trends. So, of course, I have to jump on the bandwagon. If you want a more personalized walk through, I’m offering a webinar on the topic.
I think there are four major themes for next year:
- Technology Spend
So, let’s talk about each one.
4 Channels that will Undergo Major Change
Especially in the use of online applications, this channel will undergo major shifts next year. Some of it will be due to regulatory change and some due to improved analytics. Customers are demanding a better application experience and few banks have responded. 2015 will be a year that demands a better account opening experience. Once that is in place, there could be a major shift in preferred banks as millennials and digital-savvy customers find banks that smooth the process.
Big surprise here, but there’s a lot of focus on mobile. I’ll go into more detail about mobile in its own separate theme, but clearly a lot of money is targeted for digital platforms with a special focus on mobile. Mobile is the go-to platform of choice among affluent and younger customers. It will also be the platform that will need to be conquered in order to capture the much discussed “underbanked.” No longer a niche offering, mobile banking is ready to be the standard for banking self-service. The Financial Brand published an article recently that talked about the push towards a better, more marketable digital experience.
3. Contact Center
Here I mean call center, although we like to say Contact Center in banking for some reason. Online chat or other means of communication are just not “there” yet with banks. But, there is a push to revamp scripting and context-based servicing on the phone using event triggers and big data analytics. Banks are exploring pushing relevant information to call center staff depending on what the customer has just done, what they’re asking to do now, and the kind of customer they’ve been. This use of analytics would be a huge improvement over what happens today.
Of course, the perennial Branch of the Future discussion must be on the list. But I actually see a shift away from discussions of branch footprint and closures to a conversation about layout. Branches in the United States need to follow the lead of branches in Western Europe and Asia-Pacific to create a better flow. It’s no longer acceptable to walk in the door to nothing but a teller line. Models that include a greeter that help direct people to self-service or personalized service options are winning. And although this isn’t new, it certainly hasn’t taken hold in the US. That needs to change in 2015.
3 Things You Need IT Budget For
1. Digital Experiences
If you’re sensing a theme, you’re right. Again, I’ll spend more time on this in its own separate heading, but you need to have budget allocated for your digital platform. However, instead of just infrastructure money, the bank should be dedicating money in two major areas: user experience testing and design, and data analysis. It’s time for banks to roll out superior digital interfaces. That means focusing on CX – customer experience. Hire some experts. Maybe even from Silicon Valley. There’s no excuse anymore for awful UI. Also, spend time looking at data. Transactions, context, and geo-location data will be critical to providing a better digital experience. More on that in a minute.
2. (Big) Data Analytics
I have to say “big” data or no one will pay attention. But frankly, as I like to say, banks don’t have a big data problem; they have a “little” data problem. In other words, the best possible source of information about their customers is sitting in their own bank with no one looking at it: the transaction data. This data doesn’t fit the standard “big” data definition, but it does have high velocity and volume (although probably not on the Twitter or Facebook scale.) Banks need to start analyzing this data, segmenting it, and understanding customer behavior by these events.
3. Redesigned Application Processes
Some big changes are coming in 2015 around DDA account opening. It will affect every major system used to process deposit applications. Put the money aside. The CFPB is coming to audit the process and you can be sure they will follow through on their “threat” to re-write the rules. My prediction is that by 2015 many of the data systems banks use to underwrite deposit accounts in the United States will be completely changed. This won’t be a project you have a lot of time to prepare for. It will likely come swiftly and allow little time to adjust.
2 Features Your Mobile Platform Will Need to Support
I promised I’d spend more time on mobile. Changes are coming to digital banking. Make sure you’re ready to handle the two big features that will be considered “must have” by the end of 2015.
1. Multi-factor Authentication
Security is a big topic of conversation and the mobile banking application holds the best promise towards creating a more secure banking experience. And with more security comes more convenience – believe it or not. When banks are more comfortable that you are who you say you are, they will start allowing transactions that today are considered too risky. We may even be able to welcome back wire transfers to business accounts (though I’m not holding my breath, since that seems to be cost cutting masquerading as anti-money laundering.) Be ready to offer a token through your mobile banking application.
2. Geo-Location Context
I’m stealing this one from Asia-Pacific where they are becoming experts at this. Get ready to start contextualizing your mobile banking application based on where the user is. Are they near a branch? Then the mobile app should be prepared to interact with branch personnel or the ATM there. Are they near a merchant they often do business with? Then the mobile app should offer appropriate discounts. Are they in a car dealership? Then the mobile app should default to a one-click auto lending application.
1 Major Change Regulators Will Require
You thought I was going to say EMV, right? Well, no. That’s too easy. This one is a true prediction.
In the United States, the CFPB is going to require a change in how deposit applications are processed. I did a whole webinar on this a few months ago. I predict that by the end of 2015, banks will not be able to use risk-related information to deny opening a checking account except in the most serious of situations. That means the underwriting process – once compliance and KYC issues have been cleared – will begin to focus on product fit rather than product approval. The banks that are ready to use data to find the best deposit product for the customer given the data will win. Those that can’t, won’t.
Want More Detail?
I’m doing a webinar on trends for 2015. You should check it out if you want to hear me discuss the top 10 trends for 2015.