Nobody will disagree that the banking industry is going through massive changes unlike anything seen in decades. New technologies are impacting legacy banking models and consumer expectations, as well as the competitors in the marketplace. We are even seeing changes in the way financial institutions engage with consumers across their financial lifecycle. The question is, what are the most important trends that we will need to take action on in the next 12-18 months? More importantly, what action is needed?
A report from Acxiom addresses several banking transformation trends, including: the growth of partnerships, enhanced use of consumer data, the impact of fintech firms, enhanced ways to build engagement through marketing, and the impact of a platform economy. Transformation in banking will continue beyond 2020, but building competencies that can take advantage of these trends needs to begin now.
1. An Age of Collaboration
With change in the banking industry happening so quickly, it is impossible for any organization, of any size to “go it alone.” The value of establishing the right strategic partnerships has never been greater. “Partnering can extend products and platforms into new markets, expose brands to new customer segments and create scale,” Acxiom observes. The ultimate objective is to improve the customer experience with an enhanced value transfer.
When the right strategic partners are selected, there should be greater agility, a seamless integration with systems and products already in place, and a synergy not possible previously. There also needs to be a flexibility within the partnership that will allow the collaboration to adjust to marketplace changes without needing to renegotiate the relationship.
Going forward, partnerships will extend beyond traditional providers to include fintech firms, big tech organizations, communities and potentially even governmental units. In some instances, solution providers will partner with each other to enable a better integration within banks and credit unions with less internal and external friction.
Done well, these bilateral and multilateral networks of providers will be able to deliver more personalized solutions than was possible previously. Imagine 8-10 different savings or lending solutions being available for different segments the retail consumer or business population. These solutions will increase engagement as well as value to the consumer (and financial institution). This will be accomplished by leveraging new data assets, advanced analytics, and modern communication platforms.
When markets become disrupted by new technologies and competitors, many legacy companies struggle to keep up. They are often simply ill-prepared to develop new products and services in the midst of the…