At October’s BAI Beacon, I had the opportunity to present my analysis of the coming changes to depository accounts and how the competitive market for financial services is driving institutions to create strategies organized as platforms. During the Q&A portion, a participant asked me if creating a platform is only achievable by the very largest financial institutions—meaning, how can institutions with less control over their technology, less capital to invest strategically and smaller marketing budgets effectively address these market dynamics?
Here’s the short answer: Building and maintaining a sustainable platform of broad financial services delivered in an omnichannel ecosystem is likely unrealistic for many financial institutions (or FinTech companies, for that matter). But that doesn’t mean it’s impossible in context. The trick is to learn how to “eat the elephant”—which we all know is done in small bites. To offer a fuller answer, here’s five ways it might be done:
World of wider web: Update your website
If your website offers a menu of comprehensive services but leaves the user wandering to find what they need, you’ve lost them on the first page. Before a customer logs in, show them what you’ve got in the way of DDA feature functionality, credit card rewards, timed deposit offers or loan promotions. Ask them this: “Which of these do you need now?” In other words, establish a relevant “conversation” from go. Once the customer logs in, present them with a snapshot of their accounts, spending, available loans and/or credit score—meaningful information that showcases a pro-active feature of your site. If they need to pay a bill, there’s a button for that.
Spring into cleaning: Declutter your products
Do you offer a rewards program that’s incomprehensible to most non-financial people? Do you have a first generation mobile banking product? Is there a for-fee service you offer accountholders that hasn’t seen any growth since the turn of the century? Spend some time shining a bright light on your existing products, their features and offers; this can illuminate areas where some expense can be recaptured. But more importantly it helps focus your organization on investing in products that have value and meaning to your target account base.
Riding shotgun: Deputize your customers
Conducting business in a virtual world can scare many customers since often it’s unclear who’s in control, or which entity has access to what information. Put your customers in control by offering them tools that allow them to set activity alerts, control account access, limit certain transactions or take part in the security process through tools that require explicit activities (such as modifying the CVV code at time of purchase). Encourage them to use these tools via video tutorials; provide proof of their efficacy and encourage platform and teller personnel to talk about security and personal risk management.
Theirs, yours, mined: Mine your vendors
Over time, we get comfortable with our vendors and tend to use the same products or services, or allow them to prioritize their sales outreach. Consider a much deeper examination of the services and technologies your vendors offer. Most institutions do business with highly diversified technology providers—who in turn, have or will facilitate integration with third-party applications, for example. Ask them to integrate the applications you need to compete and encourage them to dive deeper into their capabilities to support your strategic goals. This is your relationship. Make the most of it.
Reap what you sew: Knit your own network
Small business owners often represent high-net worth account opportunities. Local businesses want to sell to locals. Financial institutions—especially those that are community- or regionally-based—can work as business hubs that bring these constituencies together through co-promotions, relevant cross-sales and strategic partnerships. Branch locations can be leveraged for meeting or business incubator space. This encourages consumers to see the bank or credit union as a place that supports and helps their businesses to thrive, and not just a place to store money or apply for a loan.
So what’s the longer answer to the question of whether smaller institutions can address the competitive dynamics of the financial services market? In the final analysis, it’s crucial to employ a certain amount of creativity in the competitive thinking process. Yes, technology today is important. Having table-stakes applications and services are important. But they’re also just that: the price of entry, not a competitive advantage. And so the truth has teeth: Even the smallest institution can take at least one bite out of the elephant.
Patricia (Patti) Hewitt is the CEO of PG Research & Advisory Services and a widely recognized expert and strategic advisor to the payments industry. Patti is also the founder and editor of paymentgal.com.
Compliance training and professional development courses that are efficient, effective and on-point. Give your people the latest industry-approved tools they need to improve performance, reduce operational risk and better serve your customers.