Financial institutions focus on digital engagement as new providers gain ground

Would you bank with Amazon? New research from Fiserv finds consumers are significantly more comfortable with the idea of using technology companies to make financial transactions than ever before. As the potential for disruption grows, financial institutions are evaluating their offerings and go-forward strategies.

As new kinds of providers gain traction, it's important to remember that financial institutions are still the overwhelming go-to source for conducting financial transactions.

Expectations & Experiences: Channels and New Entrants, the most recent quarterly consumer trends survey by Fiserv, found more than half (55 percent) of people would be comfortable using a technology company, such as Apple or Google, for various types of financial transactions, compared to 40 percent of respondents in 2017. At the same time, use of traditional financial institutions for bill payments, loans, money management and other financial services remains steady.

"Financial institutions are already competing at some level with nontraditional providers and technology companies for mortgages, payments and budget-tracking capabilities," said Pat Reetz, senior vice president of Product Management for Bank Solutions, Fiserv. "While that disruption can be disconcerting, our advice is to embrace it. Yes, offer innovative products and services but differentiate with personal attention, data-driven recommendations and relationship-building interactions."

More Competition, More Options

Underpinning the growing comfort with nonfinancial companies is the influence and importance of the digital experience in financial services. More than half of consumers (56 percent) prefer digital interactions with their financial institutions, which is significantly higher than the 34 percent of consumers who prefer branch interactions. Age is a predictor of people's preferences; millennials are nearly three times as likely as their older counterparts to prefer mobile interactions.

Nonfinancial companies have upped the ante for those experiences, Jaime Dominguez, director of strategy and product management, Credit Union Solutions, Fiserv, said.

2017 and 2018 Consumer Confidence in Tech Company Financial Transactions"When I ask financial institution executives to name their competitors, they're just as likely to say Amazon and PayPal as they are to name another bank or credit union," Dominguez said. "Why? Technology companies are laser-focused on providing an easy, consistent and intuitive experience."

As new kinds of providers gain traction, it's important to remember that financial institutions are still the overwhelming go-to source for conducting financial transactions.  The survey found a large percentage of people are comfortable conducting the following financial transactions with traditional banks and credit unions:

  • Transferring money to others (87 percent)
  • Paying bills (85 percent)
  • Taking out a loan (85 percent)
  • Managing money (77 percent)
  • Tracking a budget (77 percent)

While banks and credit unions still have an advantage, that may not always be the case. Younger and more affluent consumers seem to have fewer issues going somewhere other than a financial institution to find the technology, flexibility, convenience and ease-of-use they want and expect.

Experience Matters

Consumers bring their expectations for easy, fast and intuitive experiences into everything they do. Ultimately, traditional banks and credit unions don't really compete against retail, technology, payments and social media companies. Instead, financial institutions are up against every digital experience people encounter.

Does your digital experience stack up with the ease and convenience of ordering coffee on the Starbucks app, shopping on Amazon or updating a Facebook status?

To learn more download Expectations & Experiences: Channels and New Entrants.

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