The Extract is a condensed roundup of digital experience news for financial services institutions, and our take from San Francisco.
For this Extract, we take a look at how Millennials and Gen Zers are and will be impacting digital banking. We also examine how leveraging AI offers a more personalized digital banking experience as well as how to keep remote workers engaged.
Digital Banking Millennials and Gen Zers
Much has been written about the impact of the pandemic on the adoption of digital experiences. Couple that trend with the continued influence of Millennials and Gen Zers in the overall move towards digital and we have a perfect storm for digital banking.
As reported in WHICH-50, a recent Juniper Research survey found that:
“More than 50% of US consumers wanting to change banks would consider a digital-only bank.” The article adds, “however, the findings showed that banks need to be more than technologically competent.” Surprisingly, sign-up benefits are the most common driver in a member’s decision to switch banks, with better rates being the second reason.
Allison Netzer, Chief Marketing and Strategy Officer at Nymbus, agrees that technology features alone aren’t going to attract Millennials and Gen Zers. In an article in Forbes, Netzer quotes a 2019 Morgan Stanley report that makes this case: “Millennials are the largest driver of net new loan demand and will continue to be for the next eight years.” Further, Gen Zers, while still young and not yet having a big impact on banks, have mobile banking adoptions rates of 80%.
Netzer suggests that banks shouldn’t be looking at adding more features; they should focus on providing better experiences. She notes, “True next-gen innovation is as much about where you innovate as it is what you innovate.” According to her work, many studies show that Gen Zers will not only be more risk-averse but also much more focused on community, particularly online.
Netzer notes, “A focus on ‘human’ digital to answer questions and guide decisions will likely appeal to them. Accountability beyond technology means leaning into the service, communication, and community aspects of banking — not neglecting these in pursuit of a killer app or the UX to beat all UXs.”
While younger account switchers are more likely to want digital experiences, they are also looking for community and service. This partly explains why the top digital banking apps in the US aren’t from neobanks with limited service but from some of the larger banking organizations. AIthority lists Ally Bank, CapitalOne, USAA, Bank of America, and Wells Fargo as the top five digital banks in the US.
Netzer quotes the CEO of Nymbus, Jeffery Kendall:
“Technology must complement and support how we engage with customers to deliver the experiences they want.” She correctly asserts that “opportunities for growth from young demographics could come from an old approach: providing value.”
Leveraging AI for a Personalized Digital Banking Experience
One way that banks and credit unions are providing value to their customers is through personalization. A recent survey of 150 banks and credit unions by Bottomline Technologies found that well over 80% of institutions under $20B in assets agree that offering more personalized advice is a key goal of data and CRM initiatives. “However, nearly 75% of survey respondents lack confidence in their ability to personalize engagement,” writes Bottomline’s VP of Solutions Consulting, Marc Salinas, in The Financial Brand.
This gap is resulting in growing investments into artificial intelligence (AI). Alex Kreger, CEO of UXDA, references Temenos in Finextra, saying “33% of bankers are currently using banking AI platforms for developing digital advisors and voice-assisted engagement channels.”
Kreger then writes:
“In the digital age, the one-size-fits-all approach no longer works as customers demand and are surrounded by a more personalized experience. As conducted in a study by Wunderman, 63% of consumers state that the best brands are the ones that exceed expectations throughout the customer journey.”
This is where AI can help support hyper-personalized digital experiences that are automated or even a hybrid of human-AI interactions. Kreger describes an “app that provides a contextualized experience… able to predict the exact moment when a user needs a specific product and provide it by combining big data with behavior-based predictive analytics.”
There are several examples of banks using AI to improve customer engagement. For instance, Australia’s Commonwealth Bank launched an app called Vonto “which draws data from various platforms and online business tools used by small-business owners and presents the data and analytics on the Vonto platform,” as described in Mortage Business.
Last week, Canada’s CIBC introduced a new AI-powered insights tool that offers money management recommendations. According to Rachel Green, “The major Canadian bank’s new AI- and machine learning-driven mobile banking app feature gives customers actionable, personalized recommendations for better spending decisions.”
Green notes that CIBC isn’t alone, adding that, “Canada’s largest banks spent around CA$90 billion ($67.8 billion) on technology upgrades between 2009 and 2018. And AI solutions to improve the customer experience were a big part of their investments prior to the pandemic to deepen relationships with clients.”
Kreger summarizes the possibilities thusly:
“People seek an emotional connection and a personalized attitude from others, and digital banking is no exception. AI can become the catalyst to building strong, valuable human-centered relationships with customers.”
Are you ready for this future? If not, contact us and we can help.
Keeping the Remote Workforce Engaged
As someone who has worked remotely for large chunks of my career, it has been fascinating to see a large number of people dealing with remote work for the past year. In an article in Entrepreneur, Amilcar Alfaro, Marketing Director for Google Cloud Mexico, examines the impact of the pandemic on the office environment and the way forward.
Alfaro calls for 2021 to “No longer be about reactive plans,” stating, “it is time to innovate and think about a world that will be different from the past.” He believes we need to “reimagine what remote working means.” The models that have emerged should be adjusted and defined to leverage what works and minimize any negatives.
He isn’t alone. Alfaro notes “a Gartner survey of leaders of different companies, 82% responded that once the pandemic ends they will continue to allow remote work for some days, with the hybrid model of collaborators in the office and at home being the most popular. As well as the implementation of flexible days and hours. However, 47% of those who answered are even considering a totally remote work model.” As an example, here at Extractable, we have gone down the path of a totally remote work model for the foreseeable future.
A concern about remote work continues to be employee engagement. Leaders we speak to echo that concern. In an article in Inc, Peter Cohan, Consultant and Babson College Professor, writes that a Babson study “Found that the most effective leaders use practical techniques that help their organizations to overcome these challenges and meet their performance objectives.” Cohan notes his Babson colleague, Rob Cross, through the study “found that working from home can cause employees to feel overwhelmed by Zoom meetings and that the most successful leaders manage collaboration in ways that boost innovation and increase employee engagement.”
Cross describes five techniques leaders can follow:
- Reframe challenges and increase happy accidents by addressing weekly hurdles.
- Build trust by sharing with your team what pleases you and what causes pain.
- Boost employee engagement by structuring one-on-one meetings well.
- Do something fun when interacting with employees.
- Reach an agreement on how your team members should work together.
We’re curious if any of our readers have additional tips.
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