By David Mitchell, President of NYMBUS
This past year, my team and I had the pleasure of working with top executives of community banks and credit unions nationwide. We shared many conversations with topics that ranged from existing technology roadblocks to digital transformation and the future of banking. While we gained valuable insight into their top strategic priorities, such as implementing more fintech partnerships, we also gained a greater understanding of their immediate concerns, like keeping pace with innovation and customer expectations.
As we continue to look ahead, these themes will likely remain at the forefront of conversation, carrying into the new year with an increased sense of urgency that will drive banks and credit unions to take action.
Digital Transformation Will Take Center Stage
Much of 2018 was spent talking about digital transformation. Financial institutions were encouraged to assess their existing operations and begin developing new digital strategies. And while some banks and credit unions used this year to execute on their plans, the majority did not. In 2019, more financial institutions will move forward with innovation. For some, it will be the year they make a major decision on a new core banking system to prepare for growth. For others, spending in digital channels will increase. Marketing dollars will shift away from traditional channels like radio and print ads, and be put towards more relevant platforms like social media and search engines. We also predict that more financial institutions will prioritize optimizing their websites to increase brand awareness and engagement. Others will implement new mobile app features and digital banking services like P2P payments to keep pace with consumer demands.
According to Forbes, 40 percent of large businesses will implement chatbots next year. By the year 2020, Gartner predicts that people will only need to interact with a human 15 percent of the time, as they begin turning to banking chatbots for financial advice and account support. Expect the bigger institutions to continue to implement or improve AI chatbots to help drive growth in 2019.
Digital transformation was a prominent theme in 2018, and many financial institutions used it to prepare and position themselves for change. 2019 will be the year that bank leaders make decisions and invest in key technologies to move forward with their growth plans.
Data & Analytics Will Drive Decisions
Data and analytics will become even more important in 2019. As access to data increases, bank marketers will leverage it to streamline internal processes and make more strategic business decisions. Executives will better understand the gaps in their existing processes in order to improve them, incorporating AI algorithms to maximize efficiency. Analytics will allow marketers to understand how to increase customer acquisition and which channels produce the biggest Return on Investment (ROI).
According to the Financial Brand in 2017, 50 percent of banks with over $50 billion in assets adopted a data analytics strategy, while only 9 percent of banks with less than $1 billion in assets did the same. For the banks and credit unions without the staff or resources to dive head-first into data or AI to power decisions, we predict more will turn to outside firms for help. Outsourcing financial marketing, operations and technology can help boost results quickly and provide an advantage for smaller institutions needing to compete with the tech giants.
Online-Only Banks Will Increase as Branches Are Reimagined
In 2019, we predict that community-based financial institutions will continue to revamp their branch networks as consumers increasingly adopt digital banking. For some, this means closing their doors and focusing on virtual channels. For others, it will entail renovating their traditional branch layout to a café type of environment, ultimately redefining the way consumers interact with their business.
According to Earnst & Young in 2017, 39 percent of consumers in the U.S. were using digital-only banking providers. As consumers become more comfortable banking online, this number will only continue to rise. Some financial institutions will launch a standalone digital bank to compete, while other fintech players will emerge with new solutions, putting increased pressure on community banks and credit unions. We also predict that online account opening will become table stakes as financial institutions try to capture new digital consumers.
More Banks & Credit Unions Will Partner with FinTech to Compete
Alternative financial service providers like Venmo, owned by PayPal, are on the rise as banks fail to deliver consumer-friendly payments solutions. Earnst & Young’s FinTech Adoption Index shows that consumers are drawn to the more transparent and convenient nature of FinTech services.
As consumers continue to seek technology that makes their lives easier, more banks and credit unions will establish partnerships with fintech companies, like NYMBUS, to power their technology and help them compete with the megabanks. Eighty-nine percent of bankers surveyed by Manatt, Phelps & Phillips, LLP say partnerships between banks and fintechs will captivate the industry over the next decade. We think 2019 will be the year that these partnerships hit a tipping point.
When looking towards the future of the financial services industry, we see great opportunity for the banks and credit unions willing to take an active role in transforming their business. Financial institutions must place a greater emphasis on their digital experience, and not just the products and services they offer. If you’d like to speak with us about how NYMBUS can help power your financial institution’s digital transformation, contact us to learn more.