The next webinar in “The Fintech Times Presents” series revolved around digital banking, more specifically its uptake following the pandemic and what new technologies are starting to see mainstream adoption.
As customer interactions move predominantly online, access to digital software has never been as important. Now that significant financial transactions alongside regulatory practices such as KYC’s rely on technological improvements, banks and other financial establishments need to undertake considerable burdens to make sure that information is accurate, customer relationships are protected, and documents are processed with speed and efficiency.
The panellists for this webinar were Brian McKenney, Chief Innovation Officer at HSBC, Stanley Chow, Senior Product Marketing Manager at Foxit Software, and Ron Shevlin, Forbes columnist and Director of Research at Cornerstone Advisors. It was moderated by The Fintech Times’ Editor-in-Chief, Gina Clarke.
Impact of Banks’ Digitisation
As has been highlighted by The Fintech Times, the pandemic has catalysed digital transformation across the financial industry. The webinar kicked off with the panellists discussing the extent of this transformation and what impact it has had on banks. Stanley Chow was the first to respond, highlighting the impossibility of turning back to traditional banking once the pandemic is under control: “Now that the benefits of digital banking, like speed, convenience and easy access, have been realised there’s no going back. A high volume of bank transfers will continue to take place through online and mobile channels and customers are going to expect that a company’s services are available through these, and that they can be completed on one singular channel.
“If a customer starts the process online but needs to complete it elsewhere, like signing papers at a branch instead of completing electronically, that’s going to cause frustration and abandonment and even possibly, a switch to a competitor.”
Whilst echoing this sentiment, Ron Shevlin pointed out that despite the belief that many financial institutions have digitised, this wasn’t entirely true and that many “are way behind the game in terms of digital account opening, and beyond that, even regular everyday processes are yet to be digitised.”
Brian McKenney rounded out the first discussion by explaining the pandemic’s impact on banking. He countered Shevlin’s point, saying, “there has been massive changes in our (HSBC’s) digitisation, and I think across the board in many institutions of those customer journeys.” McKenney went on to explain how cloud technology enables customers to receive new features much more quickly.
Age respective response
The conversation then moved to how different age demographics have responded to the changes. Chow noted, “The switch from physical branches to digital banking was a welcome change, especially for our younger customers who enjoy the convenience of bank access right on their mobile phones, and for older customers wanting to avoid the risk of contracting covid, it’s just a necessity.”
Building on this, Shevlin explained that research had shown Gen-Zers and Millennials were prominent users of account managers at their respective financial institutions, pointing out that since the pandemic, younger generations had been more open to discussing finances. Importantly, he said, “we’ve seen this huge adoption, especially amongst younger customers, of digital tools, but they’re also turning to humans. I think this places a huge challenge on a lot of banks to be able to meet those needs.”
The Rise of Neobanks
Being unable to go to a physical branch has caused an enormous uptake in challenger banks across the world. Chow said, “For customers who are used to speedy services of online retailers like Amazon, the same is expected of banking services. So opening an account should be able to be done in one online or mobile session. Digitising the entire account opening experience, end to end is a surefire way to satisfy customer preferences and minimise abandonment rates.”
Shevlin added, “I’ve tried to call them [neobanks] community fintechs, and the reason for this is if you look at the ones who have been successful or are gaining some traction in the market, they are gaining customers because they are taking a very narrow-based segmentation approach.” Despite not being profitable yet, he points out that community fintechs like Daylight, for the LGBTQ+ community, and Panacea Financial, for physicians and young physicians leaving school, have “identified the financial needs of a particular segment of consumers.”
“I think each institution needs a clear strategy and clear customer focus,” said McKenney, agreeing with Shevlin. “Broken consumer journeys are no longer suitable in the 2020s.” The next step is identifying how your product fits in and really brings value,” he continued. “I think in each institution, finding that killer product or use case that will bring real value is the foundation of strategy and how you’ve got to market in today’s age.”
As the conversation moved on to identifying which financial institution suited each customer best, Shevlin pointed out that historically, bank branch location has played a huge factor in deciding where consumers have set up an account, but he says that identifying your own needs is the best way of finding the right institution. Shevlin also added that user retention was an expired goal, as consumers no longer bothered cancelling old accounts but rather, shifted funds to a new location, so using the consumer retention metric as a way of measuring success was no longer reliable.
