Towards the end off 2021, industry professionals from Finn AI, MX, Q2, and Rival Technologies came together to talk about what they’ve learned throughout the year and what advice they’d like to “impart to banks and credit unions in 2022.”
By looking at the latest consumer research, while noting emerging or continuing trends, and drawing from many years of experience in the field, these industry participants were able to “produce their own predictions for how the industry will shape itself in the future.”
According to discussions by these Fintechs, Open Banking will accelerate into 2022.
As mentioned in a blog post by MX, the ability of banks and credit unions to “utilize their customer and member data to personalize the digital banking experience will become a dominant strategy in the new year.” Especially as younger generations are “more willing to share their data in exchange for ease, convenience, and these personalized experiences,” according to Crystal Anderson, VP of Product at MX.
Anderson pointed out that while Gen Z and Millennials are more willing to share their data for these benefits, it still needs a certain level of trust in their institution to make things work.
Anderson added:
“Since open banking allows people to consent to share their data with increased security and protection, it also gives them the freedom and confidence that they are sharing it only with the applications and the companies that offer product services and price points that they aren’t getting elsewhere.”
Security and trust is one of the “most important” deciding factors for Gen Z and Millennials in choosing their financial institution, and “through this trust a bank or credit union can offer an enhanced, personalized experience,” the update noted.
Allowing third-party Fintech apps to integrate themselves into your virtual banking experience, opening up your APIs to them, will “let users take advantage of these niche tools while maintaining the confidence and security they have with established financial service providers,” the update explained.
Carl Kessler, CIO of Civista Bank, remarked
“The reality is that these customers you want to win have tools that they really like… if you’re not going to be doing an open banking platform where they can use the tools they want along with your tools, you essentially have to convince them to leave what they’re already enjoying. Whereas, if I plan an open banking position, I can get them on my platform, I can show them we deliver value, and over time I can continue to win more and more of their business.”
By embracing open banking and partnering with third-party fintech apps, you can “provide the same tools that customers and members already enjoy using while also providing the security and trust that makes them feel safe,” the update noted.
Financial Health and Wellness Will Create Market Differences in 2022
The ability for a financial institution to offer users with guidance and tools to “empower them with financial health will be a key market differentiator in 2022,” the MX team wrote in their blog post.
Anderson also shared:
“Currently, 54% of this population that we surveyed do not believe that their financial service provider cares about their needs, so offering those data-driven and automated solutions that are focused on financial health and wellness help users take control of their finances without requiring them to do all that heavy lifting.”
Jake Tyler, CEO & Co-Founder of Finn AI, says that this shows “a shift in the relationships that banks and credit unions will have with their users.”
“As we look to the future, it’s about how we make that digital experience more personalized, deeper, more proactive, really helping you manage your money,” Tyler added.
Institutions Offering a Full Suite of Digital Services Will Legitimize Themselves for Gen Zs
Community and regional financial institutions can keep “a hold on their HENRY (High earning, not rich yet) Gen Z and Millennial customers by making sure that they offer a wide variety of different services,” the update noted.
Ryan Hollister, Senior Director of Engineering at Q2, said:
“How do we retain [a] relationship as they start to pay down their student loans, as they look for wealth management services? Those services all need to be inside financial institutions digital banking services, or else it’s going to be the boiling of the frog as all of these direct-to-consumer fintechs are offering them point solutions that will inevitably water down the relationship they have to traditional financial institutions.”
Digital Channels Will Remain The Most Popular (But the Human Experience is Still Important)
Online service is, and will “continue to be, the most popular way for users (especially Gen Z and Millennials) to get in touch with their financial institution.”
According to Jake Tyler:
“Digital, certainly for Gen Z and Millennials, means mobile.”
Around 80% of Gen Z and Millennials use Mobile as their “primary banking channel, while Baby Boomers will be more inclined to internet banking or in-person visits,” the update noted.
Justin Knowles, Strategic Innovation Officer at City Bank Texas, commented:
“There has to be a similar look and feel with digital. We want to be digital-first, but you can’t just be digital-only.”