Digital Disruptions Challenging the Traditional Role of FSPs
Nowadays, booking a flight, planning a vacation, or shopping online is done via mobile devices – it’s all easy, instant, and seamless. Smart digital platforms like mobile phones and voice assistants power these superior experiences and this digital-first model has changed the game forever. Smart devices are an active part of consumers’ digital lives, creating a fundamental shift in how business is done. It’s only natural that consumers expect mobile banking to be just as easy and seamless as everything else they do on mobile devices. Consumers expect account opening to be a digital process and onboarding to take no more than few clicks. If it doesn’t, they simply switch providers. In order to operate within the entirely new financial services paradigm, banks, credit unions, and other Financial Service Providers (FSPs) must transform business models to respond and stay relevant in the onslaught of BigTech’s platformization plays. Apple’s iOS and Google’s Android have largely caused this consumer shift off the desktop and onto mobile. Additionally, Amazon’s Alexa, Facebook’s Messenger, and WhatsApp are taking the battle deep into mobile territory.
Proliferation of Mobile Banking
Financial Service Providers (FSPs) like banks and credit unions have long relied on siloed channels, like web/online, mobile, or branches – each with its own workflows, content, screens, and support. Many of these experiences aren’t particularly efficient, staff friendly, or even customer friendly. Yet if FSPs switch their focus entirely to mobile banking, they risk alienating consumers who prefer traditional channels like branches. Simultaneously, if FSPs don’t invest enough in a digital experience, they risk future business and growth, with younger consumers taking their business elsewhere. How can FSPs strike the right balance? The answer varies for each FSP based on their target audience(s) – segmented by behavioral habits/preferences and generation. To increase outreach to consumers across geographies and generations, FSPs are opening fewer new branches, and increasing their digital footprint via mobile banking. Mobile banking also helps FSPs deliver better consumer experience, engagement and relevant services. So what is mobile banking? Mobile banking typically infers that the FSP offers banking via a mobile app, with online bill pay, digital wallet, and mobile P2P payments that can be typically accessed via tap, swipe, and voice – instead of ATM or teller. Mobile banking is delivered via smartphones, smart watches, and voice assistants, providing a new way of interacting with finances. To create a digital-first platform that enriches consumer lives, FSPs can leverage four pillars: omni-channel banking, modular architecture, open banking, and smart banking. Omni-channel banking ensures streamlined and optimized customer journeys over any touchpoint. Modular banking implies building blocks that can be reused and deployed as needed to make changes and respond easily to competition. Open Banking leverages open APIs to connect to best-of-breed third parties. Smart banking implies FSPs leverage AI and machine learning technologies to gather, analyze, and mine data to drive predictive and personalized interactions, boost product-consumer fit, and increase retention as a trusted partner.
The Opportunity in Mobile Banking
Widespread adoption of mobile banking tells us that consumers have reached a tipping point in feeling safe as they conduct financial transactions via their mobile devices. The opportunities for FSPs are wide open for the adoption of next-generation digital technologies such as voice-assisted banking. The winners in mobile banking will anticipate future needs of consumers, not only delivering them first, but delivering them best. As a pioneer in the FinTech and Big Data space, Envestnet | Yodlee offers a wide range of products to help FSPs power next-gen mobile banking experiences. With our Financial Wellness Solution and easy-to-deploy white label apps like AI FinCheck and OK to Spend, you can easily provide your customers with unique and simple ways to manage, automate and analyze their finances. We also offer a unified platform API that enables seamless account opening, speedier online payments, and more. Read more about next-gen mobile banking with these eBooks: Best Practices for driving the Fintech Digital Revolution Preparing for the Bot Revolution Using AI to Improve Financial Health