Wednesday, September 9, 2020
“It’s widely known that the COVID-19 pandemic has accelerated the use of digital banking tools,” Roddy said. “The biggest takeaway, however, is that many banks have not been prepared to match consumers’ desire for a more personalized banking experience because of their outdated legacy systems.”
Roddy proposed that digital banking trends are opening new opportunities for banks to rethink and modernize existing systems. The 1,000 U.S. consumers surveyed appreciate mobile and online access to banking, she noted. About 62 percent of millennials and retirement-age respondents, and 66 percent of Gen Z respondents, value digital services more than they did before the pandemic, she stated.
Clayton Weir, chief strategy officer at FISPAN, observed that 3 out of 4 millennials would choose big tech over traditional financial institutions for financial services. These consumers, who represent a large portion of the professional sector, will opt out of traditional banking if it is inefficient or complicated, he noted.
“We believe the future relationship between a bank and its customers involves real-time, contextual, bidirectional data flow,” Weir said. “When a bank is embedded within its customer's ERP or accounting system, if they've earned the permission, they'll have more visibility into their customer's data, and can begin to offer an ever-expanding breadth of products and services that will add material value to the customer experience.”
Weir further noted that financial institutions can leverage advanced technology and ERP systems to improve the customer experience. ERPs are core systems of record for businesses and as such, the real financial center for a business, he stated. A business may have multiple banks, but it has one ERP, one source of truth for accounting, payables, receivables, cash forecasting. As banks think about open banking and “platformification,” the primary financial service consumption channels for businesses won’t be online banking, mobile banking, chatbots or Alexa, it will be accounting and ERP applications, which is what FISPAN provides with our solution, he added.
Weir maintained that banks need to embrace digitalization because fintechs and challenger banks are exploiting gaps that traditional institutions can’t fill. In recent years, banks have discussed the need for digital transformation without making meaningful changes, he stated. The COVID-19 crisis additionally emphasizes the need for traditional financial institutions to act now or risk losing market share to newer, tech-savvy competitors.
Weir went on to say that banks don’t need to invest millions in digitization. Countless fintech startups can help them bring new life to existing offerings and capabilities to better meet the needs of today’s new millennial professional.
Vaduvur Bharghavan, CEO at Ondot Systems, has also seen a dramatic increase in digital products and services in the banking sector in response to COVID-19. In a recent address at the Mobile Payments Conference, he proposed that new tech is disrupting the banking industry, particularly in payment card issuing. When Apple Inc. launched the Apple Card in 2019, a steady drumbeat of tech providers came up with real-time, transparent, digital-first card products that users can see on their screens, he noted.
“In under a minute, I can sign up and become an Apple Card customer,” Bharghavan said. “Banks have to offer similar end-to-end onboarding and instant card issuance. And in that moment of instant gratification when the card is issued, push it into the wallet and help consumers understand their purchases and spend.”
The critical point is engaging users in moments that matter, Bharghavan explained, whether they are checking their credit limit, managing spend or reporting a lost or stolen card. And if they lose a card, issue a new one and transfer all their preferences from the old card to the new card, instantly. Customer stickiness and choice are key imperatives for providing digital-first banking, he stated.
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