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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

 

Financial Institutions & Digital Capabilities

Financial Institutions have moved swiftly to enable more digital functionality. This effort has taken on many different paths. For some, the move has been to offer a combination of the following: BaaS, Open Banking, digital loan applications, a stand-alone digital bank, faster payments, access to cryptocurrencies, P2P functionality, electronic signatures, PFM, online and mobile app B2B capabilities. All this has been occurring, while at the same time, Big Tech, FinTech, and DeFi, have been launching new capabilities that target specific needs of consumers and businesses. Many traditional financial institutions have also developed partnerships and strategic alliances with Big Tech and FinTech firms or have invested in them directly.

 

 

COVID is Driving A Shift In Behavior

The COVID crisis further amplified the need for consumers and businesses to conduct more of their financial lives online and through mobile apps. In many ways, the changes in our industry were a direct result of a shift in consumer and business preferences that have been a long time coming; a need to move money faster and with a delightfully easy experience. While consumers’ lives and business operations have not yet returned to “normal,” we have learned how to adapt to life with a deadly virus around us. This includes being more comfortable with conducting more of our financial lives virtually rather than in person.

What comes next?

From IFM’s view, we see changes in consumer and business behavior daily. As a result of more digital functionality, the amount of data has grown exponentially. Some FI’s have seen their digital transaction volumes grow more than 2x-3x faster than previous years. IFM works with many of the largest banks in the U.S. and smaller FI’s that have a critical role in their communities, and all are impacted by changes in consumer and business behavior.

The movement of money has never been faster and will only become faster still. To be competitive, FI’s must be at the top of their game when utilizing data insights and predicting future customer behavior. IFM has an industry-leading customer intelligence solution to help your FI communicate more efficiently, with direct personalized content, and keep you and your enterprise informed of future behavioral changes.

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.

 

 

 

 

Like other industries in this new millennium, the financial services industry has been rapidly transformed by new technology.  With the rise of digital money, real-time money movement, and increased competition within the industry, this change is growing at an even faster pace.  But let’s face it, this industry has been one of the slowest to change compared to the Music/Movie Industry, Travel/Transportation, Communications, Engineering/IT/Cyber Security, and Shopping. 

 

How an institution prioritizes the utilization of data and information technology will largely dictate its future success.

 

One reason has been an inability for many traditional FI’s to transform their culture to prioritize data and information technology.  How an institution prioritizes the utilization of data and information technology will largely dictate its future success.  A recent article by Industry advisor Jim Marous, “How to Build a Data Culture that Supports Digital Banking Transformation” (thefinancialbrand.com), mentions the importance of implementing a data-centric strategy across the enterprise.  The article states that “Customer insight platforms and the process of information management can expand to customer service, product development, compliance, privacy governance and other key areas of the organization that need a complete and real-time view of the customer.”  

 

 

Insight Financial Marketing (IFM) recognizes the importance of customer insights and has supported financial institutions across the country for nearly twenty years.  IFM clients have implemented our customer intelligence service into their enterprise-wide data strategy and have become leaders in the industry.  IFM’s advanced technology provides new capabilities related to detecting changes in customer behavior and the ability to predict customer behavior.  

To learn more about how IFM has helped FI’s transform data to be more easily leveraged throughout an enterprise and to enable your FI to compete more effectively in the future, contact Rob Reale, Associate Partner and National Sales Manager, at rreale@infimark.com or visit our website, www.infimark.com.    

 

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.

Among the more recent technologies, Artificial Intelligence (AI) could have the most significant impact on the financial services industry.

First discovered about 70 years ago, AI has transformed many industries already. From supply chain to retail and travel to education, AI has completely changed how work is done in these industries. The technology is predicted to have a similar impact on finance.

Common Challenges in Finance Marketing

Although financial service providers face many marketing challenges, most providers struggle with three fundamental problems, namely:

Commoditization

As the financial services market grows (thanks mainly to digitization), so does competition. Today the competition is so high that many financial services providers find themselves offering the same products.

Commoditization is a situation where the products and services offered by multiple market players are pretty much the same. When this happens, products from competing players can become interchangeable. As a result, consumers feel that they can move between service providers without losing value. Where there’s high commoditization, it’s very easy to lose customers no matter the quality of your branding.

Lack of Consumer Trust

For a long time now, financial service providers have complained about the lack of trust among clients. In a 2016 survey by the National Association of Retirement Plan Participants, for instance, over 90% of respondents said they did not have faith in their financial services providers.

Again, the chief contributor to the increased distrust is technology. After witnessing so many cyber-attacks and data breaches in the last few years, the majority of consumers feel that their data and money are not safe. The financial crisis of 2008 also seriously eroded the little trust consumers had in financial companies.

Automation

In most of the industries where technology is revolutionizing work, automation is one of the major highlights. In these industries, you’ll find many tasks being automated. You’ll also likely find robotic machines working alongside humans to complete tasks faster and with fewer mistakes.

Unfortunately, the finance industry has lagged in automation for several reasons, one of them being the delicate nature of the landscape. In finance, even one small mistake can have grave and far-reaching consequences. Compliance and regulations also make automation a big headache, often forcing providers to stick to traditional, familiar methods.

How AI Solves the Perennial Challenges

Although it’s impossible to solve all the challenges in finance completely, experts predict that Artificial Intelligence can ease many of the problems. Here’s how;

1 – Smarter Credit Decisions

More than three-quarters of consumers prefer to pay via credit and debit cards. Indeed, only 12% of today’s consumers still prefer to pay in cash. What this means is that the credit card segment is more important to financial institutions than ever.

Artificial intelligence provides for a faster, more accurate assessment of loan candidates – at a lower cost. Better still, AI-powered credit assessment solutions account for a wider variety of factors, leading to better-informed, data-backed decisions.

2 – Risk Management

In financial services markets, risk can be deadly if not given proper attention. Accurate predictions are critical to the protection of businesses.

AI will play a starring role in risk management going forward. Using superfast computers and AI solutions, providers can handle vast amounts of data in a short time. Cognitive computing (a branch of AI) helps to manage both structured and unstructured data, making it possible to catch potential issues early.

3 – Analysis of Customer Behavior

In the financial services industry, institutions find it difficult to develop the same deep relationships with customers that may exist with companies in other industries. Through transactional and behavioral analysis, artificial intelligence is empowering the finance industry with the ability to analyze money movement at scale so F.I’s can anticipate the future financial needs of an individual customer. Service providers such as IFM can work with banks to foster the development of A.I. solutions via IFM’s cutting edge technology that cleans and categorizes bank customer electronic financial transactions in near real-time. IFM’s data analytics service enables financial services firms to offer timely products and services to their clients and strengthens the relationship between a customer and the F.I. With IFM’s capabilities, a financial services firm can analyze client behavior and money movement – in near real-time – and can also trigger security mechanisms if patterns of transaction activity seem unusual.

4 – Personalized Banking

Personalization is the new way to market – even in finance. In multiple studies, consumers have made it clear that they are more likely to buy if the experience is personalized. In one study, for instance, 44% of respondents said they are likely to become repeat customers if a brand offers customized services.

AI currently offers some of the best solutions for personalizing the marketing of financial solutions based on consumer behavior and transactional analysis.

Bottom Line

Financial Services firms are faced with three common marketing challenges: Commoditization of products and services, lack of consumer trust, and the ability to automate solutions. Artificial Intelligence will help to solve these perennial challenges by providing an opportunity for smarter credit decisions, improved risk management, and a more in-depth analysis of customer behavior to provide a more personalized banking experience.

What strategy should your institution move forward with to solve these marketing challenges? Data Science experts believe that the key to developing A.I. solutions that guarantee better productivity and ROI rests on access to clean and categorized transaction data that can be utilized to power A.I. related solutions.

Reach out to our team at Insight Financial Marketing today to learn how IFM’s Intelligentsia™ service could have a positive impact on your institution’s ability to market the financial solutions of the future.