The first email I received at work in 2014 was from a bank; along with a festive new year’s greeting, the email touted the bank’s new mobile app and a new feature that let customers set up travel notifications directly from the bank’s website. Later that day, I was in an airport reading a friend’s Facebook post about how she wished “more apps were like Uber.”
These are just a few small anecdotes about ongoing digital trends impacting businesses and banks both large and small. I recently spoke with a banking executive who put it simply: “Digital is what we do now.” (This quote is now the header of my Twitter feed.)
Forrester recently published our Trends 2014: North American Digital Banking report, in which we identify major forces impacting banks and lay out five actions that we recommend digital strategists take to prepare for the future of digital banking. Here’s a sample of some of our findings:
- Banks will face a sustained – yet unclear – regulatory environment. In both the US and Canada, banks are confronting an uncertain regulatory future. The Dodd-Frank Act was signed into US law on July 21, 2010, but a large number of the rules and regulations remain unwritten. It's unclear when they'll be finalized, and the fact that 47% of deadlines have already been missed – according to the law firm Davis Polk & Wardwell – doesn't bode well.
- Customers’ use and expectations of digital services will keep rising. Customers are increasingly going digital: Roughly four in 10 Canadian online banking users agree with the statement "I rely less on bank branches today than I did in the past," and about one-quarter of US online adults say they would consider banking with a firm that does not have any branches. Meanwhile, 23% of Canadian online adults say "the quality of the mobile and online services is a key reason" they remain with a provider.
- Digital disruptors will make their presence felt. New entrants like Simple and the invitation-only Moven as along with established disruptors like PayPal are using digital technologies to try to win younger, tech-savvy customers. Meanwhile, dozens of payments startups like Square and LevelUp in adjacent markets might soon start eyeing expansion opportunities and new revenue streams. Digital disruption can also take other forms, ranging from Wal-Mart's continued dabbling in financial services to some consumers' arms-length experimentation with digital currencies like Bitcoin. Digital disruption is unavoidable, but the good news is that many digital teams are positioned to help banks prepare for the challenges and opportunities that digital disruption brings: Digital strategists are the ones spending countless hours identifying adjacencies and planning online and mobile initiatives.
- Leading banks will innovate by tapping internal talent. To compete with digital disruptors, leading banks are embracing open innovation, an approach that solicits new ideas from three broad participant groups: employees, partners, and customers. Internal talent – employees on the digital team and beyond – is a critical resource, and companies are tapping into this by running hackathons, rewarding employees for new ideas, and opening innovation labs. For example, Wells Fargo Labs, which focuses specifically on digital innovations, has yielded services like the online person-to-person (P2P) payment vehicle clearXchange
- Banks will pilot more cross-channel banking initiatives. Forrester defines a cross-channel interaction as “Any instance in which a customer or prospect moves from one touchpoint to another when completing an objective.” The number, frequency, and impact of these cross-channel interactions are growing, and customers' expectations around seamless cross-channel service and sales are rising. Put simply, this isn't your grandfather's cross-channel banking. We recommend digital teams at banks start small by mapping out which channel pairs are especially important, either because customers or prospects commonly move between two touchpoints — from a mobile app to an ATM or branch, for example — or because the two touchpoints are used in interactions that have an impact on the bank's bottom line — from an online mortgage calculator to an in-branch appointment with a mortgage advisor, for example.
I encourage you to read the entire report here. In addition, let us know what you think in the comments section below.