The need for omnichannel banking
What most traditional banks are missing is a digital, omnichannel customer experience that modern consumers are demanding. This is the Amazon/Uber generation – they are looking for a true omnichannel experience, not just a mobile app. In other words, they don’t want to follow up a mobile interaction with a visit to a branch, to their mailbox, or to their existing bank account to check for deposits. The global pandemic is accelerating the demand for these omnichannel experiences dramatically. According to Forbes, use of mobile banking has increased from 35% to 85% in the months since the pandemic started.
The need for digital fraud solutions
Many traditional banks are also behind the curve on fraud and ID verification solutions that are designed and optimized for a digital banking platform. Modern consumers don’t want to visit a branch, check their mailbox, and perform transactions to be successfully onboarded. Banks need to heed the call with a strong digital fraud mitigation strategy. However, the traditional banks have been late to the trend. The global pandemic is a major trigger point. These banks cannot afford to keep waiting.
The need for bank branches
It’s 2020, do banks still need branches to succeed?
Since 62% of Baby Boomers visit branches according to FIS, it would seem that banks still do need branches for the foreseeable future. Many banks still require their customers to engage in some sort of branch banking, but that can be changed. They will likely evolve from the transactional centers that we have come to expect to more of a consulting model that will help educate, inform, and guide customers in budgeting, investing, and buying homes. This will hopefully make banking more accessible to all and increase financial literacy.
Traditional banks aren’t immune to this neobank hype as many of them are creating neobanks of their own, like BankMobile from Customers Bank. To an industry veteran like myself, this doesn’t seem to make any sense. Why give up your biggest advantage of brand and trust in order to fight hand-to-hand against these challenger banks in their own backyard of online and mobile tech? Especially if most younger people are choosing banks based on their parents’ connection to those same traditional brands.
Traditional banks need to evolve
So what’s a traditional bank to do? Let’s review the argument. Banks have a big lead in the brand and trust department.
Many millennials are choosing their primary bank from a referral from a baby boomer who doesn’t use challenger banks.
The traditional banks simply don’t have the acumen and experience when it comes to a digital/mobile-first integrated experience and haven’t cracked the code of digital-only verifications to provide the seamless end-to-end experience that consumers are demanding.
So does the traditional bank dilute their brand and marketing budget and create its own neobank in search of the hype and large valuations? Or, at the end of the day, do traditional banks simply need to evolve–brand and all–into what is needed in financial services today: a trusted brand with an integrated omnichannel experience backed by digital-first ID verification.