Three Pitfalls to Avoid When Launching an Online-Only Bank Brand or Digital Branch
By David Mitchell, President of NYMBUS
As we enter into the new year, digital transformation remains at the forefront of conversation. More banks and credit unions are moving forward with their plans to innovate by implementing new technologies. Others are leveraging fintech partnerships and launching online-only banks in order to expand their geographic footprint, increase deposits and reduce overall expenses. While there are many benefits to creating a niche, standalone experience, there are some pitfalls to watch out for that can wreak havoc on your success. If you’re considering standing up a new online-only bank brand or digital branch, make sure to avoid these three epic fails.
1. Failing to Be Compliant
Before introducing a digital-only brand or branch, be sure to follow all applicable regulations and compliance requirements. One fintech company learned this the hard way.
Robinhood, a popular digital brokerage firm insured by the Securities Investor Protection Corporation (SPIC), attempted to launch checking and savings accounts within their app, boasting a 3 percent interest rate and no-fee model.
A day later, they were reported to the Securities and Exchange Commission (SEC) by SPIC President and CEO Stephen Harbeck. According to a CNBC article, Harbeck had serious concerns with the company’s plan, but was unable to voice them before the product launched. Since the company is not technically a bank, they cannot issue checking and savings accounts. And unlike the FDIC, the SPIC does not protect deposits unrelated to investing.
Consequentially, Robinhood removed all mentions of this new service from their app and website, and posted a letter from their founders to clear up the confusion, rebranding the product as a cash management service one day after its release.
To avoid this from happening, we suggest launching your digital brand under an existing bank charter that is FDIC insured. If you outsource our SmartLaunch package, NYMBUS ensures that the new digital bank meets all regulatory and compliance requirements, including full OFAC, BSA and AML, and we would operate your digital brand or branch on our Tier 4 data-centers.
2. Failing to Give Consumers What They Want
If you look at what consumers want most, you’ll find that a great mobile experience tops the list. A recent study by Citi found that mobile banking apps were the third most used apps after social media and weather apps. Fifty-nine percent of millennials use mobile banking daily and have an average of three financial apps on their smartphone already.
When starting a new digital bank, a great mobile and online banking experience is paramount. Find a technology partner that can help you deliver a seamless end-user experience that meets or exceeds customer expectations. To avoid an epic fail, focus on the following components:
- A modern, API-driven core data processing platform: This allows you to remain nimble as technology and customer expectations change. New third-party products and services can easily be added, or even custom-built to extend the functionality of your core platform.
- Access to your data and data collected by others: Data is the key to personalization. A unique experience can only be created by analyzing your customers’ past behaviors to predict their future needs. Work with a partner, like NYMBUS, who gives you complete access to your data to help better understand your customers or members.
- An intuitive mobile banking app: Before launching a digital-only bank brand, make sure its mobile banking app is easy to use and free from bugs or defects. Allow time for testing in order to work out all the kinks and to avoid frustrating your customer or member base. Also, invest time and money into prioritizing the features they want to ensure customer satisfaction.
3. Failing to Have a Solid Digital Marketing Strategy
Another pitfall to avoid when launching a new online-only bank brand is failing to have a digital marketing strategy that leverages data and personalization. We live in an era where people are more apt to engage with messaging that is highly relevant to their life. Avoid trying to be all things to all people, and focus on delivering your new digital banking brand to a key segment or affinity group. This allows you to tailor your products, services and messaging towards them.
To create brand awareness and effectively target new customers, invest in digital marketing tactics that are relevant to your niche market, whether it be social media advertising, geo-fencing, or Search Engine Marketing (SEM). Or, combine multiple tactics into your campaign strategy to maximize results. Once you’ve successfully attracted a new audience, follow up with an onboarding strategy that will increase product usage and cross-sales.
When you partner with NYMBUS to launch your digital banking brand through SmartLaunch, our team of digital marketing experts will handle all of these components for you, from developing a custom campaign strategy to executing and optimizing it daily. And beyond just digital marketing, NYMBUS helps to develop your new brand identity, creates your custom logo and website, and offers ongoing marketing support to ensure your long-term success.
Want to learn more? Contact us to set up a call.