Banks and wealth management companies have defined themselves in a way that’s no longer sustainable in a connected, mobile world.
That banks and other wealth managers are facing changing times was the clear takeaway from a panel discussion hosted by Verizon June 10. Although banks are among the organizations that consumers trust most, studies have shown, they’re being seriously threatened by a changing mobile landscape that has consumers shifting their brand allegiances and expecting significantly more from those they include in their lifestyles.
“We know disruption is coming,” said Niti Badarinath, senior vice president and head of Mobile and Money Movement at U.S. Bank.
“We have a lot of customers who trust us … and we have lots of their information,” he continued. “We haven’t been good about giving them advice with things such as goal planning. We have been very transactional. What we haven’t been is relational and more proactive with the information we have.”
The way in which banks have traditionally engaged customers has put them at a disadvantage.
“People share things on social media that banks would love for people to share with them,” said Chandan Sharma, global managing director of Verizon Financial Services. But the type of relationships people have with Facebook or Twitter is far different from the one they have with banks.
A recent Accenture survey found that 40 percent of 18- to 34-year-olds said they would be likely or very likely to bank with Google, were that company to offer such services. Additionally, 34 percent were open to banking with Apple and 45 percent were open to PayPal.
“We’re still the most trusted. The question is, how do we pivot and take the strengths we have to compete against [the Googles of the world],” said Badarinath.
Banks need to be more “customer-driven,” he continued. “We tend to go at customers with bank language, instead of customer language. … We know what problems we’re trying to solve. They want personalization, context, real-time information. … We’re not competing with other banks, we’re competing with all the other apps on your phone.”
IDC Global Research Director Mike Versace said the way that customers are known to banks is something “that’s been impressed on us,” but that approach is no longer scalable. Moving forward, he said, the focus will be on behaviors.
“It’s about who we shop with, where we travel to,” said Versace. “Behaviors transition into characteristics, and habits become identities.”
He added that while transactions used to be core to banking, that’s becoming less true.
“What’s core today? Analytics is core. It’s about helping you differentiate your product from those down the street,” said Versace.
U.S. Bank’s Badarinath said that banks haven’t “woven” themselves into consumers’ lives.
What could it be like if they did?
“You don’t look forward to applying for a mortgage; you look forward to a new house. You don’t look forward to applying for a car loan; you look forward to driving away in a new car,” said Sharma. In a truly customer-focused scenario, he explained, a person could see a car on a showroom floor, scan a code with the smartglasses he’s wearing, and the paperwork could come together almost instantly with little more than a signature on the part of the new car owner.
For such scenarios to be possible, and for banks to engage more closely with consumers, they’ll need to be part of an ecosystem, all parties agreed, though that opens up some security risks.
“Banks will have a fairly rigorous vendor management process that’s still a work in progress. It’s a place where we have to be careful,” said Badarinath.
That said, banks already have “terabytes of information” on customers, Badarinath acknowledged. “The ones who can analyze that the best and figure out how to act on it [will] win.”
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