On December 15th, 2021, as the year began to draw to a close, industry thought leaders from Finn AI, MX, Q2, and Rival Technologies came together to discuss what they’ve learned throughout the year and what advice they’d like to impart to banks and credit unions in 2022. By looking at consumer research, noting emerging or continuing trends, and drawing from years of experience in the field, these industry leaders were able to produce their own predictions for how the industry will shape itself in the future. Here are some prediction highlights from this webinar session:
Open Banking Will Accelerate Into 2022
The ability of banks and credit unions to utilize their customer and member data to personalize the digital banking experience will become a dominant strategy in the new year. “Especially as younger generations are more willing to share their data in exchange for ease, convenience, and these personalized experiences” says Crystal Anderson, VP of Product at MX. Anderson also explains that while Gen Z and Millennials are more willing to divulge their data for these benefits, it still requires a level of trust in their institution to make it work: “since open banking allows people to consent to share their data with increased security and protection, it also gives them the freedom and confidence that they are sharing it only with the applications and the companies that offer product services and price points that they aren’t getting elsewhere”. Security and trust is one of the most important deciding factors for Gen Z and Millennials in choosing their financial institution, and through this trust a bank or credit union can offer an enhanced, personalized experience.
Allowing third-party fintech apps to integrate themselves into your digital banking experience, opening up your APIs to them, will let users take advantage of these niche tools while maintaining the confidence and security they have with established financial service providers. Carl Kessler, CIO of Civista Bank, explains that “the reality is that these customers you want to win have tools that they really like… if you’re not going to be doing an open banking platform where they can use the tools they want along with your tools, you essentially have to convince them to leave what they’re already enjoying. Whereas, if I plan an open banking position, I can get them on my platform, I can show them we deliver value, and over time I can continue to win more and more of their business”. By embracing open banking and partnering with third-party fintech apps, you can provide the same tools that customers and members already enjoy using while also providing the security and trust that makes them feel safe.
Financial Health and Wellness Will Create Market Differences in 2022
The ability for a financial institution to provide users with guidance and tools to empower them with financial health will be a key market differentiator in 2022. “Currently, 54% of this population that we surveyed do not believe that their financial service provider cares about their needs,” explains Anderson, “so offering those data-driven and automated solutions that are focused on financial health and wellness help users take control of their finances without requiring them to do all that heavy lifting”. According to Jake Tyler, CEO & Co-Founder of Finn AI, this shows a shift in the relationships that banks and credit unions will have with their users. “As we look to the future, it’s about how we make that digital experience more personalized, deeper, more proactive, really helping you manage your money,” says Tyler.
Institutions Offering a Full Suite of Digital Services Will Legitimize Themselves for Gen Zs
Community and regional financial institutions can keep a hold on their HENRY (High earning, not rich yet) Gen Z and Millennial customers by making sure that they offer a wide variety of different services. These will keep these users comfortably in place, allowing them to stay where they are rather than force them to migrate to a full-service national bank. “How do we retain [a] relationship as they start to pay down their student loans, as they look for wealth management services? Those services all need to be inside financial institutions digital banking services,” explains Ryan Hollister, Senior Director of Engineering at Q2, “or else it’s going to be the boiling of the frog as all of these direct-to-consumer fintechs are offering them point solutions that will inevitably water down the relationship they have to traditional financial institutions”.
Digital Channels Will Remain The Most Popular (But the Human Experience is Still Important)
Online service is, and will continue to be, the most popular way for users (especially Gen Z and Millennials) to get in touch with their financial institution. While these channels saw a massive influx in usage when the pandemic began, there likely won’t be users moving back to in-person channels when the pandemic recedes. “Digital, certainly for Gen Z and Millennials, means mobile” says Jake Tyler: about 80% of both Gen Z and Millennials use Mobile as their primary banking channel, while Baby Boomers will be more inclined to internet banking or in-person visits. “The pandemic accelerated a trend that already existed… that won’t go back” Tyler predicts.
While digital channels are becoming predominant for customers and members, that doesn’t mean that the human touch will become less important. Live support staff will still be very necessary for maintaining a healthy relationship with consumers. Justin Knowles, Strategic Innovation Officer at City Bank Texas, knows this well: “There has to be a similar look and feel with digital. We want to be digital-first, but you can’t just be digital-only,” Knowles explains. Being able to harmonize and merge the worlds of digital and in-person banking together, combining the convenience and appeal of digital with the personability and familiarity of in-person, will create the best possible experience for your customers or members.
These highlights are taken from a joint webinar by Finn AI, MX, Q2, and Rival Technologies. You can watch the full webinar on-demand, hear more industry predictions, and learn more about how Gen Z and Millennials want to bank with you here.