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Right now, the transactional profile of a consumer checking customer at financial institutions across the US is likely to include a P2P account with either PayPal or CashApp and a newly established Coinbase account as customers’ education and investment in cryptocurrency continues to grow.  They are making regular monthly payments to a SoFi student loan, Rocket Mortgage, or Prosper personal loan, many are using their Apple credit card, and are regularly adding and storing money onto their Starbucks or Dunkin apps.  From a small business customer perspective, many are using QuickBooks for their accounting and payroll, using Square’s merchant services, or have a small business loan from PayPal or American Express.

 

 

As consumers and businesses have rapidly adopted app-based financial tools and services, many-core transactions are conducted with competing institutions.  Given these customer scenarios, how will your financial institution (FI) grow loans, prevent customer attrition, and maximize profitability?  Can your bank’s strategy compete in today’s digital and fast-changing world

Regardless of the geographic area your traditional bank or credit union serves, these might be the profiles of many of your consumer and business checking customers.  Understanding what attracted them to engage with competitors is paramount to the development of a strategy to win them back.  Proactive strategies that include identifying the changes in your customers’ financial behavior, life events, and lifestyle changes, on a daily basis, can effectively provide your FI with the insight to help implement a direct, specialized, and personalized experience for customers that will in effect strengthen their relationship with your FI instead of continuing to send them to the competition.  

For 20 years, IFM (Insight Financial Marketing LLC) has worked with financial institutions of all sizes across the US to provide cutting-edge data science technology to financial services firms.  IFM’s data tools offer an industry-leading customer intelligence solution that enables personalized communication with your FI’s consumer and business customers.  

If you’re interested in learning how your FI can leverage daily customer intelligence, data, marketing tools, and strategic guidance to compete more effectively today and in the future, we invite you to communicate with us directly at our website www.infimark.com or contact me at rreale@infimark.com

 

Bank Strategy During COVID

 

In 2020, At the height of the COVID-19 pandemic, Insight Financial Marketing held a webinar titled, Outlook for the Future: Bank Strategy During COVID-19 and Beyond. From our discussion, it was clear how big of a role technology played in economic recovery.  We also saw banks receive increased deposit balances, as CARES Act-related assistance was disbursed to consumers and businesses.

This year we felt it was only fitting to share an update regarding the same topic, looking at bank strategy amidst the continuing impact of the pandemic and beyond.

In the presentation, we put a spotlight on three topics:

  • The pandemic’s impact on the economy and the Financial Service Industry
  • The continuous impact technology has on the Financial Service Industry
  • Actions needed for Traditional Financial Institutions to survive the future business environment

 

 

COVID Impact Review

In 2020, we saw businesses close their physical offices, reopen, and for some, shut them down again. Moreover, Financial Institutions supported small businesses by rolling out PPP loans and enhanced Federal Stimulus payments quickly to help cushion these companies from the unprecedented shocks of COVID-19.

According to the Deloitte Economic Spotlight, in May 2021, there were 7.1 million fewer people in the labor force this year as opposed to February 2020. Deloitte further adds that the pandemic significantly affected employees in low-wage occupations by 5.4% compared to the higher-wage populations, which stood at 2%.

We also highlighted COVID’s impact on lending. The most notable change was the decreased rates in mortgage interests in 2020. And as of October 2021, there was a seasonal slowdown, specifically in the real estate market.

Investors Reaction to COVID-19

A review of the Nasdaq, Dow Jones, and S&P 500 indexes shows the pandemic led to a dramatic lagging of the financial market at the onset. However, in 2021, due to the multiple Federal Stimulus packages that were rolled out, the markets recovered and have increased significantly.

Outlook for the Future: How the Changing Economy Will Affect Bank Strategy and the Financial Services Industry
As for the future of retail banking, data shows that:

  • There might be an uptick in interest rates in 2022/23.
  • Due to the success of the economic assistance programs, there is an increase in the money supply.
  • Fintech and technology firms will transform how money moves.
  • As we move forward, the top 2 traditional banks will continue exerting competitive pressure.
  • Outlook for the Future: How the Changing Economy Will Affect the Financial Services Industry
  • We also discussed the changes occurring in the financial services industry, influenced by technological solutions.

FinTech companies continue to succeed because of their customized solutions that meet business and consumer needs. For instance, American Express recently established a digital business checking account for SMBs.

Decentralized finance is becoming more popular—owing to its ability to meet specific needs. With blockchain, traditional areas like saving and investments will in the future not require middlemen such as brokerage firms.

FinTech companies have become more ‘bank-like.’ For instance, Venmo has grown its offerings to include services like debit and credit cards, traditionally bank services.

There’s an increasing rise in neo-digital banks that indicates the dynamic nature of consumer behavior.

As for cryptocurrency, the number of coins and wallets continues to grow. Moreover, the terminology and technology continue to change.

Outlook for the Future: Actions FI’s Need To Make To Survive the Future Business Environment

To close the presentation, we discussed the practical steps FI’s needed to take to enable their future success and survival. First, FI’s will need to identify their value proposition. Traditionally the focus has been on financial products and services that meet customers’ desires.

However, with the advancement in technology, we’ve seen a shift in customer demands. For instance, people now expect instant solutions. And as a result, the traditional face-to-face approach is less favorable, especially from a COVID-19 standpoint. Additionally, more people want to perform basic transactions online, as it is more convenient.

Secondly, analyze your FI’s competitive edge. Once you’ve figured this out, work on implementing strategies to improve the customer experience further. Remember, while technology is the future, we certainly can’t ignore the power of good customer relationships.

Finally, your institution’s ability to stay updated on behavioral trends and lifestyle changes will provide the required customer insights that will increase your competitive edge. From payments to money transfers, leveraging data on consumers’ financial activities coupled with new technology is the most straightforward bank strategy that will deliver continued success and survival.

Contact us today to take advantage of our free, no-obligation evaluation offer to get a first-hand view of your consumer and business customers. To learn more, visit us on our website at www.infimark.com.

 

Bank Strategy During COVID

 

Insight Financial Marketing recently presented a webinar called: Outlook for the Future: Bank Strategy During COVID-19 and Beyond.

We discussed the rapid changes to the economy as well as the impact on the financial situation of consumers and businesses. Now more than ever, financial institutions must have a deep understanding of the financial needs of their consumer and business customers. If your FI has not adopted a strategy to leverage intelligence from your bank’s data to help identify customer behavior trends, it will be more difficult to keep and retain customers because of their rapidly changing needs.

The New York Times recently reported a graphic showing how states are at different stages of reopening across the country. Some are open as normal, some are reopening, some having paused their reopening, and some have reversed and are imposing new social distancing and business closings. The graphic shows how states have proceeded with balancing the spread of COVID-19 by reopening their economies. Even within the footprint of your financial institution, your customers’ financial situation may vary depending on where they live and work.

We also shared insights on how investors have reacted to COVID-19 and economic uncertainty.

Two points here:

    1. Investors have rewarded technology firms as consumers and businesses have shifted their digital behavior.
    2. Retail investors are much more active in the markets due to technology applications that have facilitated free stock trading (driven primarily by the growth of fintech firm Robinhood).

The spending behavior of consumers has been shifting as well. The top earners have dramatically reduced spending while the lowest earners have remained the same. We discussed how the CARES Act has led to a rise in deposits, especially for the largest banks in the country.   In addition, most financial institutions have seen a more modest rise in deposit balances compared to the top 5 largest banks in the US.   The combination of reduced spending by high-income earners, and the influx of stimulus and COVID relief payments from the government will not continue for long. We believe that deposit retention and growth will continue to be important in the years ahead, especially in a low rate environment.

If you are interested in viewing the 30-minute webinar, please let us know. We will gladly provide a link to view the recording.  In the meantime, check out our latest vlog for a snapshot of the webinar content.

 

 

Insight Financial Marketing is an industry leader in helping financial institutions leverage customer insights, detect behavioral changes, and adopt a strategy to better serve the rapidly changing financial needs of its consumer and business customers. To learn more about utilizing our Intelligentsia™ technology please visit our website.