The majority of financial institutions are prioritizing the transformation of digital banking, while the actual development is lagging behind in most of them. With the economy uncertain, banks and credit unions cannot retreat deeper, instead doubling down on their commitment to measures that will deliver positive results quickly and at scale.
Banks and credit unions are trying to meet consumer expectations, which have drastically changed the way individuals do banking. To remain competitive, financial institutions must evolve from the inside out, from establishing new deposit and lending connections to the way payments are handled. Beyond iterative product development, innovation at both speed and scale is more important than ever, as non-bank businesses educate consumers about what’s possible in the digital age.
Here are the banking trends that need your attention this year and will set you up for a successful 2023.
1. Generation Z is too valuable to ignore
If your bank hasn’t done so already, it’s time to start investing in marketing to Gen Z (individuals born after 1996). Their future financial power and propensity to spend cannot be underestimated. GenZ is more involved than any previous generation in making financial decisions for a more secure future. They’ve been through the 2008 crisis and the pandemic, so it’s no wonder they’re looking for financial security.
Think about what matters most to them—the geopolitical and socioeconomic concerns that affect their lives, as well as the uncertain financial future they face—to win their attention and loyalty. This is a platform for developing honest messaging that will resonate.
2. The Metaverse is happening. It’s time to face the trend
According to McKinsey, the metaverse world may have a $5 trillion impact by 2030. In the first five months of 2022, brands invested more than $120 billion in the metaverse.
Banks may be skeptical of the true potential of the metaverse, but given the brands that have invested in it and the technological advances it promises, it would be interesting for every bank to at least assess its viability against long-term growth goals.
There are various reasons why banks should consider metaverse:
Future customer base: We discuss the compelling needs of Generation Z. The next generation, Generation Alpha (those born between 2011 and 2025), should also be on your radar. They will be the wealthiest, most educated, and tech-savvy generation in history, and they will be setting up bank accounts in just a few years.
Gamification: Just as Web 2.0 forced every brand and company to become a publisher, Web 3.0 will force every brand into the entertainment space. Although entertainment is a new trend for banks, you should expect it to increase future engagement.
Brand image: Early adopters are perceived as inventive, sophisticated, and ahead of the curve—qualities people look for in their financial institutions.
Customer service: Face-to-face virtual meetings will provide customers with an unprecedented level of convenience while helping banks move away from FTE in-branch approaches.
Virtual Banking: The meta sentence promises that “the old becomes new again.” Consider customers who only interact with you online/in-app displaying their digital faces in your virtual branch. Back to the world of intimacy and customer relationships.
3. The foundation of acquisition and retention is social media storytelling
Consumers are more skeptical of brands than ever before. It’s time to do some serious soul searching for your brand. Do you believe your current and future customers trust your brand?
Banks must look beyond marketing releases to develop a story approach where moments are strung together, connected across channels, happen over time and are presented honestly.
4. Artificial intelligence is not the future; it is here and now
As smart technology and artificial intelligence (AI) becomes more popular among consumers, banks must identify use cases worthy of investment for technological developments. However, the technique to begin with is not based on technology; looking at Erica from Bank of America and trying to copy their strategy will only leave you in the dust (and broke). Start by identifying your pain points.
AI is being used by banks to address issues such as risk management, credit card fraud detection, cyber security, new product development, customer service, customer acquisition and downsizing.
AI is being used by users to access and manage their accounts. The introduction of Robo advisors, 24/7 support, automated account notifications and the integration of natural language processing (NLP) text/SMS services are part of the revolution.