Due to the rapid growth of technology, consumers often expect more personalization from their banking solutions. But these expectations fuel growing trends, like using more than one financial services provider (FSP) and create tough competition for their loyalty! In our four-part ‘Securing the mobile banking channel’ blog series, we examine how FSPs can make mobile banking technology work for them and their customers.
In this, the final blog of the series, we explore why banks and credit unions need to embrace the technology curve – with mobile banking apps, as well as the next big things in modern banking.
The link between personalization, innovation, and data
Banking customers don’t always know what they want. But the majority agree that personalization is a big priority. Research shows that 72% of customers rate personalization as ‘highly important’ for financial services and 77% of business leaders recognize that deeper personalization leads to increased customer retention. And while there’s no disputing that it’s a good thing, how can banks and credit unions achieve this?
Well, many financial institutions (FIs) struggle to offer the personalization their customers expect, such as help to avoid high fees, optimizing their income, and receiving account alerts. Bank of America is one exception that’s leading the innovation charge. They added a virtual financial assistant, called Erica, to their mobile banking app. The AI-enabled assistant helps customers with most of their everyday banking tasks. In fact, more than 98% of the bank’s clients get the answers they need from Erica and enjoy a streamlined customer experience.
Global technology and management consultancy, Capco, shares this valuable insight that sheds light on the link between personalization and data:
“Think of personalization as providing the customer with real-time access to preferred products, services, and capabilities based on changing goals and evolving priorities. When done right, and with strong privacy controls, this level of personalization builds engagement, loyalty, and brand differentiation. The key to capitalizing on personalization trends is optimizing organizational data to deliver a tailored experience for each individual customer. Banks have always held vast amounts of data sourced from numerous channels, which would provide them with a clear and unified view of their customers.”
Leading FSPs do have a unified view of their customers, drawn from data collected via mobile banking, and all their banking channels. With this data, they can offer a tailored experience to customers that meets their needs and keeps their digital transactions secure on all devices.
From mobile banking to e-wallets
Banking has changed considerably since its 18th century beginnings in the US. In today’s digital world, banking customers value very different features, functionality, and benefits. And the pace of technological advancement is only accelerating. While the convenience of mobile banking is a must today, newer banking technology and innovation are also creeping up.
To begin with, mobile banking is still growing in popularity, with 73% of customers preferring mobile banking over more traditional banking channels. Some banks are going a step further, with a mobile-first approach, such as Starling Bank. The big plus for their customers is 365/24/7 customer service. But to harness the level of adaptability and other benefits this model affords, FIs can no longer rely on legacy solutions.
Next up is online banks, such as Quontic Bank, Discover Bank, or Ally Bank. These banks exist only in the digital space, with no branches or face-to-face banker meetings. The core benefit is that they’re able to offer lower fees and better interest rates. One downside to this model, however, is that these providers typically don’t cover the full range of banking services a person may need, often specializing in a particular service, such as saving accounts.
If we look at digital wallets or e-wallets — such as PayPal, Apple Pay, Google Wallet, and Venmo — they are currently the most popular e-commerce payment method, accounting for $18 trillion in consumer spending in 2022. While these digital wallets offer consumers a convenient, secure, and fast way to pay that doesn’t require a physical bank card, it’s also a highly competitive offering. So FSPs have to keep up with the latest features and functionality to keep their customers on board.
On to open banking, BaaS, and beyond
Let’s talk about open banking. This is not so much another banking technology, but rather a different approach to banking. The premise lies in banks sharing data with other financial institutions to promote collaboration, innovation and, of course, competition.
Open banking is a win-win for FSPs and customers as there’s a common goal to solve everyday banking concerns, such as reducing fees and improving customer service. Application programming interfaces (APIs) are the building blocks of open banking and help developers build innovative products, faster. Security is also a core component of this approach, as banks are sharing sensitive customer data, with their permission.
Then, there’s embedded finance, another new addition to modern banking. This evolutionary step entails integrating financial tools or services into non-financial products like, for example, the checkout tool on an e-commerce site, the payment service embedded in the Uber app, or a buy-now-pay-later (BNPL) tool. The idea behind embedded finance is to deliver an uninterrupted service to consumers, with everything all in one app.
Banking-as-a-service (BaaS) providers create these innovative embedded finance solutions using APIs — another example of the power of APIs in transforming the banking industry.
Delivering secure, frictionless digital banking experiences of tomorrow
Banking technology is rapidly evolving beyond legacy solutions to the convenience of on-the-go mobile banking, embedded banking tools in everyday digital interactions, and the adoption of disruptive technologies like AI and machine learning. These technological advancements change what products and services FIs offer their customers, and how they offer them.
Keeping in step with this progress enables FIs to manage and even predict shifts in consumer demand, protect their customers from cyberattacks, and maintain an efficient, seamless banking experience. The lever that drives success is also the most valuable asset that financial service providers have — data.
At Entersekt, we understand the power of data. Our banking-grade authentication and payments solutions break down data silos and create a context-rich picture of each user and interaction in real-time. Plus, our all-in-one approach not only protects mobile banking customers from digital fraud and identity theft but secures all digital banking channels.
Ultimately, we’re committed to continual innovation that ensures our customers get the latest technology to stay abreast of new threats, regulatory changes — and consumer demands. For today, tomorrow, and whatever lies beyond.
This is the last post in our Securing the mobile banking channel blog series. Visit the Entersekt blog for the previous three posts to explore the mobile banking landscape in more detail.
Want to learn more about balancing security and convenience in your digital banking ecosystem? Book a demo today.
Want to learn more about balancing security and convenience in your digital banking ecosystem? Book a demo today.
