29 April, 2019

Which Banking Experience Should Your Financial Institution Invest in for Growth?

By David Mitchell, President of NYMBUS

Across the U.S., banks and credit unions continue to face digital disruption. As mobile banking usage surges, branch visits continue to decline. A BI Intelligence study found that mobile banking is nearing ubiquity, with usage topping in at 83 percent. As banks and credit unions improve their online experience and make banking features more readily available via digital channels, it only makes sense that people are less inclined to visit branch locations.

This has led to the debate over what financial institutions should do with their branch networks. While some are transforming their physical brick-and-mortar experience into a café-style store front, where they can take a more casual and consultative approach to banking, others are closing them down altogether and reallocating their budget towards digital channels.

For many banks and credit unions, the question still remains: Which channel will provide the highest return on investment, digital or physical?

 

Consider Economies of Scale

Since the financial crisis, banks and credit unions have closed over 10,000 branches, 40 percent of which took place in the past two years alone. Wells Fargo recently announced their plans to close 800 branches by 2020. And over the next two years, it is estimated that consumers will further reduce their branch visits by 36 percent while increasing their mobile banking interactions by 121 percent.

According to the Digital Growth Institute, financial institutions invest an average of $2.5M into their branches and only $30k into their website. But as more people migrate towards digital banking, it makes financial sense to invest more heavily into digital channels instead of physical branches, especially when considering the fact that digital channels have a much broader reach.

 

Why Consumers Are Choosing Digital-Only Banks

Data shows that consumers are no longer tied to one bank for all of their financial needs and will leave for a better value proposition. Financial institutions are finding that they are able to offer more competitive pricing with a digital bank due to lower overhead costs, making digital banks that much more competitive and putting branch product rates under attack.

According to Ernst & Young, some of the most compelling reasons that consumers are choosing digital banks over traditional banks includes better rates, lower fees and superior service. Online-only banks also are more inclined to provide 24/7/365 customer support, whereas branch service is limited to business hours, location and dwindling staff levels.

As consumer expectations rise, digital banks are becoming more attractive for their enhanced features, convenience and around-the-clock support.

 

Improve Customer Acquisition & Cross-Selling

Searching and applying online for financial products is easier now than ever before. For banks and credit unions, this makes having a competitive digital offering imperative in order to successfully innovate and compete.

Investing in digital channels to boost customer acquisitions and cross-sales involves not only running digital marketing campaigns and reskinning your website or mobile banking app, but also modernizing the entire customer experience. People are looking for seamless integrations and expect banks to offer functionality and service akin to that of shopping on Amazon.

To ensure this process runs smoothly, and is on par with what is being offered in the marketplace, financial institutions will need to invest in rebuilding their internal processes, updating their legacy platform with new core banking technology, and retraining their staff. However, this end-to-end transformation can take several years—which may not be feasible for executing on their business strategy quickly.

 

Launch a Digital-Only Bank for Fast Return on Investment (ROI)

If rapid, organic deposit growth is a top priority for your financial institution, it may make more sense to invest in a separate, digital-only bank that does not require a full technology overhaul or expensive branch network to support it.

NYMBUS SmartLaunch was introduced to the market with this low-risk approach in mind. Its game-changing Banking-as-a-Service (BaaS) business model enables institutions to focus on their core competencies while shedding non-core operations to NYMBUS’ team of experts. NYMBUS provides the end-to-end digital marketing support, technology infrastructure and all of the operational resources required to run the digital bank for you, while providing a unique and affordable pricing model that offers a quick ROI. And, NYMBUS can launch your new digital bank in as few as 90 days.

As mobile banking functionality and adoption continues to rise, it’s becoming more obvious the need to invest in digital channels over physical branch networks. If banks and credit unions want to innovate and stay competitive, digital transformation is paramount. By investing in the right fintech partner, financial institutions can quickly launch new business models that enable growth while keeping pace with innovation, and without disruption or added cost to their existing infrastructure.

Contact us to learn more about how NYMBUS can help your institution quickly and affordably attract new digital customers and revenue.