Will the development of technology really disrupt retail banking? Thoughts on that?
Some say the rising of fintech and nonbanks dictates the future of retail banking. Overseeing a gradual decline of branches across North America, the corporate need to find smarter ways to regain market share. As a result, the use of digital marketing tactics, mobile applications, LED signs and displays have nearly become an industry benchmark in this recent decade. This is particularly important when it comes to showcasing the presence of a brand. “How to maximize market reach and retain loyalty?” This becomes a golden question marketer is trying to solve urgently.
Reacting to the latest trends, the commercial banking incumbents creatively started to integrate the use of technology into traditional practices. Most certainly, they are not the only ones. Local practices have also been integrating technology into their products in an attempt to follow the chase. Consequently, decision-makers are doing whatever they need to stay on top of the game in a market so driven by its customers.
Here are some key insights and emerging trends you should be aware of within the world of Commercial Banking in North America.
Technology vs. People
As young Bill Gate once said, “The advance of technology is based on making it fit in so that you don’t really even notice it, so it’s part of everyday life.” Before jumping into plans to make technology faster and more popular, you have to consider people of the future.
Technological advancement has become something so common, that we as consumers are starting to see new versions of products daily. In fact, the Ecommerce Foundation found the majority of buyers will take extensive time to research ahead of time. As much as 88% of consumers will seek information through their immediate environment or online channels before they even consider making a purchasing decision.
Think about the amount of time needed to sift through all THAT information. In-store ads, promotion signs, product features & reviews, online search results, etc. You name it.
Leaders in the retail banking business now need to use smarter digital advertising tactics to tell apart similar products from other players. Aiming to better reach and educate target consumers, they will also need to pivot. For instance, find more interactive ways to create personalized messages and build brand awareness. Meanwhile, this is all in the efforts to capture market share and acquire a bigger brand presence.
Retail Banking in North America
According to the Federal Deposit Insurance Corporation (FDIC), there were 6,799 FDIC-insured commercial banks in the United States in 2014. Divide that by the number of states in the U.S., you will average to around 135 banks per state. And that is a whole lot of competition in just one area.
What does that mean? It means each consumer has close to 135 options to deposit and invest their money.
That is to say, consumers like you and I will have a greater say. A greater say in demanding better experience when interacting with our local banks. As a matter of fact, we will never run out of options.
We probably have way too many choices.
TransUnion finds 80% of consumers taking immediate actions to switch financial institutions for the sake of a better experience. Meanwhile, younger consumers who find values in convenience and personalization now become a major influential force to challenge commercial banks and the conventional wisdom around consumer loyalty. Therefore, it forces big players in the market to transform.
Conditions in Canada are more or less the same. At the end of the year 2017, the Canadian Bankers Association has published its findings on the Canadian Banking system. With over 5900 retail branches running across Canada, it is surprising to find out more than 76% of Canadians are now using digital channels online. In fact, most Canadians are conducting their daily banking transactions on mobiles.
Shifting into a Digital Age
According to the “2019 Number of Digital Banking Users U.S.A.” report, there had been a steady shift in transitioning and converting traditional bank service users to go digital. The number has spiraled from 133 million to 161 million from 2014 to 2019.
This indicated a 20% increase in the adoption rate of digital banking for the average American. Such an increase was driven mostly by the prevalence of smartphones and other digital technologies. Most importantly, an increase in the presence of fintech (financial technology) firms.
Above all, we are starting to see a decline in the total number of retail branches in both Canada and the United States. In the United States, we observed a constant decrease in the number of commercial banking branches from 2014 to 2019. The total number had dropped from 6,799 to 5,256 – equaling to a 22.7% drop in just 5 years of time.
This means that decision-makers will only be retaining the most valuable or populated locations. Locations that will best serve existing or new clients to be exact. For instance, clients who are coming in for mandatory visits. Budgets and resources will gradually become scarce if costs arise in obtaining them.
Retail banks are not only responsible for enhancing client experience in-store, but they are also expected to achieve that in the most cost-efficient way possible.
Instead of investing in traditional TV ads and promotional brochures, commercial banking incumbents will now try to maximize the usage of existing retail spaces to help promote their brand and retain loyalty.
Industry News, What’s New?
If you’ve been following the news, you know the industry players are spending big bucks to convert by going digital. Whether it is implementing a digital advertising strategy, increasing digital online presence, promoting digital presence in-store, etc., they are doing it all.
- JP Morgan Chase & Co. collected consumer trends in the past decade and recorded 53 million active digital visitors in 2019. The industry giant made an announcement at the start of 2020 to devote 11.5 billion in advancing their digital platform and 36.5 million in improving mobile applications.
- Goldman Sach confirmed the partnership with Apple to deliver a brand new “Apple Card”. This was aiming to implement changes in the end user credit card experience in 2019.
- Bank of Montreal (BMO) introduced their new digital portfolio management services and online lending solutions in 2019. The solutions focused to simplify customer experience journey and cut down loan application time to minutes.
- The Canadian Imperial Bank of Commerce launched their smart banking for Business digital solutions to provide users with account insights. This helped business owners, entrepreneurs and professionals to make real time business decisions using real time data.
Digital Promotion in a Retail Banking Environment
Commercial Bank of Dubai integrated technology in branches to add value to solution-oriented consumers. They combined the use of a digital wall and bot displays to showcase a list of existing products and services.
The BMO flagship store in Toronto places a heavy focus on building a strong brand presence in-store. They do so by adding clear call-to-action messages.
Westminster Savings in Vancouver visualized consumer insights and sent key messages to the target audience groups in the branch.
Package Your Stories, Go Digital!
If you cannot reach your in-store consumers with a clear message, someone else will. If you can’t personalize and summarize your offerings in simpler terms, I bet someone else’s marketing team will find ways to do a better job than you.
With that in mind, here comes the key questions every marketer is attempting to solve:
- How to stand out in a consumer driven market? – You make them care!
- How do you make your consumers care? – You tell a relevant story!
“What kind of story though?” Some may ask.
Every bank has its individual goal aiming to work with a different target audience group.
Know what your customers are asking online and in-store! Seek to provide the best answer you can than any of the competitors in the market.
By conducting internal research on consumer insight, experienced marketers can highlight the strengths of existing products and services tailored to different consumer groups.
In-store layout and design can also paint the most relevant picture and create stories based on the successes that had already happened in previous decades.
When combining big data with consumer insights, the implementation of in-store promotion and signage advertising will allow local retail banking branches in becoming powerful branding landmarks.
Yes, everyone knows how to collect data. It is no secret that we all have amazing tools and integrations.
However, the key issue is learning how to utilize your data and deliver your messages through enhanced marketing efforts.
After all, a retail banking branch might have the potential to be as powerful as an online ad or that pop-up notification you’re seeing on your screen right now.