It’s November, which means we’re about to wrap up another year.
And what a year it’s been.
Nobody could’ve predicted what 2020 had in store.
That said, financial institutions have been making the best of a difficult situation. Most had digital projects in-flight before the pandemic hit. Since business has moved online, institutions have been accelerating digital transformation initiatives.
They’re enabling online channels to provide customers with a better, more convenient experience.
But you already knew all that, didn’t you? Analysts and industry thought leaders have been talking about it since the beginning of the year.
And so have we.
We wanted to get a deeper understanding of 2020, so we reached out to our friends at FedFis.
For those who don’t already know, FedFis helps banks, credit unions, and fintechs evaluate tech vendors. They have all the latest financial data on the shakers and movers in U.S. financial services.
So we thought: “What better way to learn about 2020 trends, then to talk to the people who have all the data?”
Bobby Button, their SVP of FinTegration, was kind enough to join our Head of U.S. Markets, Matt Singleton, in a data-driven discussion about one of the strangest years in recent history and the impact on digital transformation across banking.
They also looked at how 2020 will impact financial services next year.
If you couldn’t make the talk, check it out
I also want to highlight some of the key takeaways from the chat, so if you’re strapped for time, keep reading to learn more about how bank’s are approaching digital transformation.
The state of banking in 2020
Bobby opened up with a look at three key trends he’s noticed in banking this year.
- Institutions are stockpiling cash in the event that loans go bad as a result of COVID-19. It’s worth noting that they haven’t had to dig into these reserves yet.
- FedFis sees around 250 M&A deals every year. This year, that number has decreased dramatically.
- There have only been four bank failures over the course of the year so far. The good news? These failures were the result of issues that predated the pandemic.
Bobby also shared the framework that FedFis uses to help institutions evaluate whether a fintech vendor is the right fit for them.
They rank and rate companies using hard data. Specifically, they have three criteria they look at:
Market share, or how many customers a vendor has.
Trajectory, or the amount of deals a vendor has closed and lost over a period of time.
Key financial performance indicators, like online new account opening, which provide insights into whether a vendor has actually created ROI.
The state of tech vendors in 2020
After taking a look at banking trends, Bobby explored some key trends he’s noticed among fintechs for the year.
- FedFis is seeing the creation of more RFPs in 2020 than in past years, which means more deal activity, new projects, and installs for 2021. Interestingly, there’s an increased focus on personalization, as more banks become digitally mature and develop the right capabilities.
- Offer redemption and digital sales is a new category that’s come up in recent RFPs. Bobby anticipates that this trend will grow, as more financial institutions look to increase ROI on their products.
- Banks have been focusing on lending and account opening via digital channels to accommodate the online shift. Many are even seeking to bundle the two together.
Accelerating your digital transformation, with personalization
After Bobby’s in-depth look at the state of the marketplace, Matt jumped in to provide context around one of the big trends of the year: personalization.
He noted that the regionals and credit unions he’s spoken to are striving to deliver that rich, meaningful in-person experience they’re known for over digital. With mobile app visits outnumbering in-branch visits 80:1, they recognize how critical personalization is.
It’s an opportunity to make mobile a destination. Right now, most of the interactions financial institutions provide over their mobile apps are transactional. Personalization can change that, by providing onboarding, curated advice, and relevant offers and recommendations.
Matt believes that financial institutions can use this technology to be there for consumers when they need it. On top of that, he thinks these tools are a total game-changer from a marketing and selling perspective. That’s because they enable institutions to connect consumers with products and services they actually need.
Finally, Matt unpacked the six key enablers of effective mobile personalization, which include:
- A deep and broad universe of personalized interactions
- Scalable analytics to provide highly tailored engagement
- Customer-centric prioritization of personalized interactions
- An integrated personalization delivery ecosystem
- Clearly defined KPIs, measurements of success, and benchmarks
- A rapid test-and-learn approach to launch
As always, if you’re looking for help navigating today’s uncertain landscape or have any questions, feel free to get in touch.
*And since we’re talking about past and future trends, make sure to check out this free copy of our latest report. In it, financial leaders from Accenture and TD Bank Group share how leading banks and credit unions will survive and thrive in our new economy.