The Extract from Extractable is a condensed roundup of digital experience news for financial services institutions and our take from San Francisco.
In this roundup we cover prescriptions on how to tackle digital transformation from Gallup and from a 25 year old CEO, as well as trends in consumer behavior and fintech. Read on…
Consumer Digital Banking Segments
Gallup’s Anson Vuong and Andrew Robertson published an excerpt from a larger paper entitled Creating More Digital-Forward Customers where they examined consumer digital banking segments.
Vuong and Robertson shared Gallup’s findings of three broad digital segments: digital laggards, digital-forward customers, and middle customers.
There are some surprising results that show the problem that exists for banks and CUs with less than stellar digital adoption.
Two-thirds of customers at banks in the top quartile of digital adoption are digital-forward — nearly none are digital laggards. Banks in the bottom quartile of digital adoption, however, average 13% digital-forward customers and 18% digital laggards. Across the industry, the typical bank or credit union has a significant opportunity to increase digital use with seven in 10 customers.
They note “six areas in which banks struggle to accelerate digital adoption through human channels: culture, change leadership, infrastructure, analytics, decision-making and journeys/proficiency.”
These are very similar to the areas we cover with our clients.
Digital-Capable Is Not Digital-First
This resonates with us as we hear more and more banks and CUs say they are digital-first, when they really mean that they have raised their digital game but are still focused on their old business models.
Price notes that
Young startup leaders like me and my co-founders were raised in a world where there was always an internet. The way we interact with technology is like no generation before us. And consumers younger than us are even more digitally engaged. Zoomers spend an astonishing 74% of their time online, in fact.
The leading companies of the near future will be those who regard digital channels as their first and foremost manner of engaging customers. Companies in ‘legacy’ industries like banking, grocery, and healthcare would do well to begin adapting to this mentality from the inside out.
Price’s prescription echoes some of the same themes that Gallup noted above.
Millennials Disrupt Personal Finance
Often we hear people talk about how technology is disrupting finance. The truth is that the disruption comes from the behaviors of consumers or businesses towards finance, which are raised by technology capabilities throughout all industries.
As Millennials age and become the dominant generation (the oldest millennials are in their early 40s), the impacts of their behaviors and expectations are putting pressure on banks and CUs to evolve. An article in CB Insights quotes a 2020 Bank of America suvey that “found that millennials’ top financial priorities include saving for retirement (75%) and building an emergency fund (51%). Meanwhile, saving for ‘life milestones and future goals’ (73%) has grown 10 percentage points compared to 2018.”
The article also adds,
millennials are proving to be a fiscally conscientious generation, saving more and earlier than previous generations did at their age.
The article goes on to “analyze how millennials are approaching personal finance across:”
- Banking: Brick-and-mortar is out; digital and mobile-first are in
- Budgeting & Saving: Millennials go mobile and embrace automation
- Investing: Robo-advisors and micro-investing lower barriers to entry
- Payments: Mobile is replacing cash
- Borrowing: Credit-shy millennials embrace PoS lending
The article offers great insights in all of these areas.
The end of the year/beginning of the year is the time for predictions articles. We read what felt like hundreds of them through December and into the new year. One we particularly liked was Derin Cag’s list of 10 transformative fintech predictions in FintechMagazine.
The list includes some of the usual suspects like hybrid cloud, AI-powered financial assistants, and embedded finance, as well as several emerging trends like DeFi, exponential computing power, and sustainable fintech.
Check it out to find out if your favorite trend is on the list.