Gideon Taub currently serves as EVP of Emerging Markets for RenPSG, an innovator in shaping today’s philanthropic economy. Here he shares his thoughts on how philanthropy can empower digital banking.
Global shutdowns and government aid all contributed to Americans amassing $1.6 trillion in additional savings through the events of the last year and a half. Unprecedented swaths of the worldwide population were suddenly unable to spend money in the same way they used to thanks to the isolating effects of COVID-19. Shifting to nearly all online, contact-free banking became a commonsense requirement for any longstanding bank to remain relevant in 2021’s fintech dominated world.
Interestingly enough, philanthropic giving didn’t slow down despite Americans’ mad rush to build their savings through the hardship of 2020. Harnessing the power of the desire to do good, in congruence with a persistent demand for digital transformation, could create an entirely different banking experience for financial institutions willing to take on the philanthrotech challenge as a differentiator. Online reliance for daily activities isn’t merely limited to younger, financially burdened generations or times of crisis– digital banking is practiced by all, all the time.
Although Millennials and Gen Z are typically identified as the driving force behind digital banking’s popularity, older generations are quickly catching on. According to a report released by J.P. Morgan Chase late last year, customers 50 and older accounted for over half of the institution’s new, digitally active customers. Combining this desire for online banking accessibility with practical software to easily donate to personally meaningful charities could greatly empower not only philanthropic giving, but the very perception of banking as a whole.
Although the overall increase in charitable giving in 2020 was modest, specific sectors saw greater surges in donations, specifically public society benefit initiatives and environmental causes. How does this translate to online banking? Rather than assuming all or most customers will likely donate to a generally acceptable organisation, banks should offer a more personalised philanthropic option that allows for donations to be given to a wide array of causes that appeal to varying interests. Forward-thinking banks will need to re-evaluate their differentiators beyond reputation or loyalty and into the world of excellently executed digital transformation, especially as customers have more from which to give.
Creating an experience that caters to customers of all ages by crafting giving suggestions based on their financial history or via a quick series of questions could intelligently yet politely offer a more unique way of utilising digital banking. Personalisation is an important component of the online banking experience, bringing together data based on account activity to suggest budgeting strategies or investment opportunities.
Just as seamlessly, charitable organisations that fit the customer’s profile should be added to the mix, creating a more comprehensive menu of financial planning options for customers already interacting on their bank’s website or banking app. When relying on proper philanthrotech, banks could integrate existing personalised software tools, such as Capital One’s Eno, to do more than answer transactional questions. Instead, these tools will be integrated with a donor-specific profile that provides a colourful, digital picture of how the customer has given in the past and where their giving could go in the future. Think of Spotify’s “wrapped” feature, but for philanthropic giving. It would serve as yet another way to bring individuals and their families closer to their bank – a form of digital bonding and provide another reason for users to become digital banking users.
Attached to this digital reliance, or because of it, come speed and convenience, both key characteristics of digital transactions. Bill payment, money transfers, and caps on spending can now all take place automatically. As cash flow once again revs up to pre-pandemic levels, the fast-paced nature of digital banking will have to keep up with its demands, all automatically.
Potential legislative changes and political movements play a heavy hand in this labyrinth of online financial activity, requiring swift changes in the direction in which money flows. As the Biden administration pushes for a significant increase in capital gains taxes, wealthy customers will look to philanthropy to ease the burden. If banks can offer a built-in, automatic giving solution as part of an existing online banking platform, most of the work to find a meaningful charity and donate to it both quickly and compliantly is done.
Philanthrotech has the potential to truly empower hurting non-profits by connecting generous Americans to the causes they deeply care for. This potential goes far beyond the philanthropic community, however. Digital banking and fintech have whet the appetite of a new kind of customer, one that seeks to be catered to in a personalised, yet fast and convenient manner. Charitable giving could satisfy this hunger by integrating giving platforms with existing digital banking infrastructure, making the experience highly tailored to the customer’s wants and needs while allowing banks to focus on their area of expertise.
As the economy continues to recover and Americans return to their old spending habits, finding key differentiators will be of utmost importance to banks seeking to enamour the digitally dependent customer.