by DRUM, 15 Nov 2019
Meet Ron Denny, financial services and business development consultant for DRUM Agency. In his Q&A, he takes an up-close and personal view on how fintech companies and traditional banks are measuring up right now.
- What do you think large banks can learn from the fintechs about customer onboarding?
Probably a better question would be what CAN’T large banks learn about fintech onboarding. Fintechs are very, very good at understanding what their target audience wants, doesn’t want, and what they’re not getting from their current bank. Plus, they have the nimbleness and the latest technology that puts them in a better position of having the customers in the center of all of their decision making.
Just look at the personal loan category, which has been the biggest disrupter to date and where bank share has eroded nearly 10% since 2010. Make it painless. Make it fast. Make it easy. Make it visually pleasing. Make it … (gasp!) … cool. Make it completely digital. We live in an Amazon world. Consumers don’t care about a bank’s processes or systems or other excuses. If banks can’t meet their expectations, this new generation of consumers can go elsewhere. That’s not an option their parents had.
- Which banks do you feel have done the best job of adapting to the new standards for online user experience? Who is leading the pack?
Banks that aren’t committed — and I mean truly committed — to meeting the new, online experience expectations of today’s and tomorrow’s consumers, will die on the vine. They’re just whistling past the graveyard.
Digital-only banks like Ally, Simple and Chime get their share of good overall UX scores from their customers. For banks with physical branch locations, finding a balance between the old cliché of high-tech and high-touch is still a work in progress, but progress is being made. It’s hard to pick a leader at this time, but follow all the coverage and noise about the digital transformation in the financial industry, and you’ll see some of the same names pop up.
A giant like Chase has deep pockets and the luxury of launching a new digital bank under their big corporate roof. Other larger banks obviously “get it” and are investing heavily; they know what’s at stake. Bank of America has been innovative with their virtual financial assistant and their fast and flexible loan options, especially mortgages. Other banks to watch are Capital One and even a BBVA, which has impressive biometrics and a goal of having digital enrollment available to all of their users by the end of 2019. Even the upcoming BB&T/SunTrust merger is stating how the new entity, Truist, will be reinvesting millions in merger cost savings into technology and innovation.
- Where do you think larger banks have an advantage over smaller start-up companies? Where do you think they have a disadvantage?
In addition to the trust of their customers, larger banks also have the capital, the large customer base, the ability to take deposits and — a biggie — the complex regulatory approval to conduct bank business.
Smaller start-ups have the edge in the areas of the latest technology, streamlined structures and processes, and nimbleness and flexibility. Fintechs also live in a different day-to-day culture from banks; their DNA is all about innovation and disruption, not like banks whose cultures are more conservative, buttoned-down, risk-averse, and have both innovative and status quo employees sitting at desks.
- What do you think prevents the large banks from adopting some of the tactics of the fintechs — particularly when it comes to web/app design and the onboarding process?
I think it’s a combination of several culprits: having the right technology, leadership, buy- in top-to-bottom and from all the different lines of businesses, digital skills, customer- focused processes, and understanding what a massive transformation and investment this will require. It’s the biggest challenge facing this generation of bankers; they’re getting attacked from all sides. Plus, with the good earnings banks have been experiencing, I’m guessing some are thinking, “We can push this back a bit or wait to be acquired; our status quo model is working just fine this quarter.”
- Faster, online-only applications are very popular today — but what, in your view, are the benefits of sticking to the traditional, in-person style? What are some situations in which that method would be more valuable? And, if you were speaking to a young person with a smartphone in hand, how would you make your case?
Branches have been concerned about declining foot traffic and how to build more in- branch customer relationships for decades, starting way back with drive-up ATMs and the first call centers. But with today’s quickly evolving digital advances, even the old standby reason for consumers needing a branch — financial advice — can be replaced with technology.
If I’m a young customer, smartphone in hand, I’m going to have to be convinced WHY I need to step inside a branch. What’s in it for me? Banks were wrestling with “The Branch of the Future” concept even before the digital disruption started. The pressure to redefine and transform tomorrow’s bank’s “physical location” has never been greater.
Bank branches are not going away anytime soon, but let’s face it, many of the existing 70,000+ branches in the U.S. were not designed to combat or compliment the digital banking revolution. Bankers realize this, too, and are working hard to transform the purpose, relevance, even the look and locations of their branch investment.
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