As Brett King, CEO and co-founder of Moven and bestselling author, once said, “If you don’t like rapid, earth-shattering change and you work in a bank, you should start looking for a new job in another industry.”
The financial sector has never been static—banks and credit unions have long been subject to disruptive technologies, shifts in government regulations and tax codes, inflation rates, economic policies, and more. And change can be a good thing: The advent of IT in banking has helped banks and credit unions solidify customer and member relationships, simplify day-to-day operations, and identify new revenue opportunities. It all depends on whether you choose to carry on business as usual or embrace change as it happens.
Based on industry forecasts, 2019 looks to be another year characterized by major changes. Read on to find out how these four banking and credit union trends are reshaping the industry, as well as how you can incorporate them into your business strategy.
1. Use data analytics to develop a customer/member-centric strategy
Over the past few years, there’s been a marked shift across multiple industries, including the bank and credit union industry, away from the traditional sales-driven, push approach towards a customer-centric, inbound marketing approach.
This customer-centric approach goes hand-in-hand with the emergence of digital banking and big data. Customers and members generate more valuable data now than ever before, meaning banks and credit unions are sitting on a veritable goldmine of information. In fact, 71 percent of banking and financial markets firms report that the use of information, including big data, and analytics is creating a competitive advantage for their organizations, according to a survey from IBM. Fifty-five percent of respondents with active big data efforts identified customer-centric objectives as their top priority, according to the same survey.
Of course, this all amounts to very little if you don’t have the right tools with which to process customer data. Advanced data analytics tools—especially those that utilize modern relationship management platforms —take customer information and analyze it to provide actionable insight, such as which customer segments are responding and converting across product groups, exposing real time trends that can help you tweak an already inflight marketing program. Data analytics can also assess profitability and fit for products and services based on a range of other factors such as industry, credit tier, household segment, and market.. Modern solutions can even track the success or failure of marketing initiatives and provide qualitative feedback on how these initiatives align with respective target groups. .
2. Improve your multi-channel methodology
Multi-channel isn’t exactly a new concept for financial institutions, but it continues to feature prominently on banking and credit union trends lists because the meaning of multi-channel has changed in the era of technology. Where multi-channel once referred to things like print advertisements, ATMs, and local branches, it’s more recently expanded to include digital channels, such as websites, mobile applications, and social media.
That said, these newer, tech-driven channels have yet to completely displace traditional, physical channels. Although 65 percent of customers interact with their banks through multiple channels, those who use mobile and computing more than once a week are over 60 percent more likely to be active branch users, according to a survey from McKinsey & Company[V43] ; this suggests that, while interested in new technologies, customers still value face-to-face interactions. It’s clear that, in addition to looking for ways to refresh their digital strategy, banks and credit unions need to continue to focus on delivering quality customer service in their branches.
The first step to guaranteeing quality service is to empower employees with knowledge. Empowering employees means reducing their effort to gather and collect information and also minimizing the work associated with common business processes. Grant employees access to customer preferences and history to give them a better opportunity to have more intelligent and relevant conversations with the new and existing members. Implement a system that enables your employees to access this information anytime, anywhere so that they can provide a consistent customer experience (CX) regardless of whether they’re on the go in the community, the service center, or providing back office support. In the interest of extending your multi-channel reach, consider investing in platforms that identify opportunities for upselling and cross-channel growth, as well as tools that enable your employees to share documents, alerts, and or facilitate referrals across business lines.
3. Strategically implement new digital solutions
Innovation moves at the speed of light and it can be difficult for banks and credit unions, regardless of size, to keep pace. With FinTechs disrupting the industry and advanced technologies, such as the Internet of Things (IoT), artificial intelligence (AI), and mobile computing changing the way financial institutions do business, it’s no wonder that 33 percent of financial services organization plan to “invest significantly” in digital skills and education in 2019, while another 50 percent intend to invest “somewhat,” according to a study from Econsultancy. For this reason, digital implementation and integration has consistently been one of the leading banking and credit union industry trends for the past few years.
Implementing digital solutions isn’t always easy, but there are measures you can take to make the transition easier. Consider investing in back-office solutions that evaluate your business’s performance, specifically the performance your people, products and solutions that enable the performance measurement across customer and member segments. This include moving away from traditional point solutions in favor of cloud platforms that provide better interoperability, analytics and insights, and connectivity to common productivity tools and toolsets.
4. Save time and money with automation
One way to gradually introduce new technology to your business is to use automation, which leverages AI and computing, in your back office. By now, you’re probably already familiar with some of the benefits of automation:
- Automation increases productivity by cutting back on busy work and enabling employees to focus on more complex tasks;
- It frees up employees to dedicate more time to customer service, improving the overall CX;
- It eliminates the risk of human error from transactions and ensures consistent results;
- It reduces operational costs, especially those associated with staffing and training.
Banks and credit unions that take full advantage of automation—that is, those that automate processes and residual operations—see an improvement of over 50 percent in productivity and customer service relative to those that don’t, according to McKinsey.
If you have yet to take advantage of automation, there’s no time like the present to get started. When researching potential systems, keep in mind which processes you intend to automate — for example, you might want to streamline new client onboarding or tighten up the automation around specific lending processes. Over half of bank applicants report being most dissatisfied with long wait times for credit decisions and a difficult application process, according to a survey from the Federal Reserve, so those are some processes you might consider automating. Understand where it makes sense to automate and where it doesn’t. If you have the opportunity to reduce end user or customer effort, then you are on the right track.
If you’d like to learn more about how your business can profit from these and other banking and credit union industry trends, or how to put these trends into action, contact the team of qualified experts at Hitachi Solutions to get started.
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