What are America’s bankers talking about these days? Overall, I see a lot of optimism balanced by a healthy dose of continued caution. Bankers see challenges from changing consumer expectations and behaviors, greater regulation, restricted revenue streams and increased pressure from non-traditional competitors. In an industry that feels very different than it did just 10 years ago, they also see great opportunity as doors are being opened by new business lines, efficiencies and technologies.
As they always have, savvy bankers use every tool at their disposal to achieve new levels of service delivery and customer satisfaction, driven by new products and efficiencies that lead to greater profitability and growth. They know intuitively that in today’s marketplace, technology simply must be part of every conversation.
Paying Attention
Cautionary tales abound. Everyone has known a competitor that was slow to update aging systems, or to provide anytime/anywhere access to financial services, and then experienced declining market share and lost credibility among its remaining customers. Outdated systems will eventually inhibit growth and playing catch-up is almost as painful as the alternative.
There’s some truth to the theory that the less customers see of their bankers, the more they like them. Although branch-based banking isn’t going away, anyone who’s been in the business for more than a few years has observed a dramatic shift to new and highly convenient alternatives, each built on new functionality, such as depositing a check with a smartphone, that can increase market share, promote additional products and drive customer loyalty. A successful technology strategy delights customers while streamlining infrastructure and creating more efficient processes.
For example, with more than half the nation now tied to their smartphones, it’s no wonder mobile technology is changing the way we live our lives and the way we manage and move money. The ability to make a deposit, transfer funds, check balances and pay bills is now literally at our fingertips and consumers are coming to demand that kind of mobile banking experience.
What impact can offering app-based mobile banking have? A client recently told me that her organization has experienced a 400% increase in mobile banking adoption over just the last year, and that she expects some customers will soon begin conducting 100% of their transactions using the mobile channel. According to Fiserv research, the number of mobile banking households is expected to reach 35 million by 2014. While nonbank payment providers are moving quickly to attract this business, the good news for our industry is that consumers still prefer to conduct their financial activities through their bank. It’s our job to keep it that way.
A dizzying array of payment options – mobile, online, interbank transfer, person-to-person payments, prepaid cards, remote deposit capture – have all been created to solve specific problems. How do I split the rent with my roommate? Can I deposit these checks without going to the bank? How will I pay an employee who doesn’t have a bank account? When financial institutions make customers’ lives easier, they’re also likely to build stronger and longer-lasting relationships.
Every banker knows it’s all about anytime/anywhere transactions. By linking mobile banking and mobile payments services to customers’ demand deposit accounts, financial institutions can benefit from the revenue opportunity that comes from processing a greater number of smaller, day-to-day transactions. Banks of every size can provide a dynamic experience that keeps payments revenues from slipping away to nonbank providers.
Look for real-time money movement, or the ability to send and receive funds that are credited to the recipient’s account in a matter of seconds, to soon dominate the payments conversation. Fiserv research shows that banks offering an immediate, person-to-person payment option that settles in real time, along with older three-day and next-day payment settlement options, could see markedly higher adoption rates among potential users.
The days when banking technology simply ran in the background are long gone. Today, proven technology solutions in the hands of experienced, creative and credible professionals are the answer to many of our industry’s greatest challenges and key to our growing opportunities.
Ms. Carstensen is president of the Bank Solutions division of Brookfield, Wisc.-based Fiserv. She can be reached at [email protected].
