As Sam Cooke sang many years ago, “It’s been a long, a long time coming,
but I know a change is gonna come, oh yes it will.”
Our rapidly changing financial system triggers the same reaction from us. Banking is in the midst of a Sam Cooke moment, with technology and competition driving the train.
This decade, without question, is the high-water mark for disruption in the financial services industry.
Fintech and How it Effects Bank Marketing
Oracle produced a fascinating white paper from three webinars on digital transformation and the challenges and opportunities facing banks. As we’ve said in the past, if banks from Main Street to Wall Street fail to innovate in the face of evolving technology and expanding competition, they run the risk of falling the way of the newspaper, Sears, or Blockbuster.
First, a history lesson. Oracle examined the “waves upon waves” of digital disruption. The 1990’s witnessed a change in music, photography, video rental and retail. The 2000’s brought new ways to deliver television, news, travel and recruitment. Finance, retail marketing, healthcare and the automotive sectors began to witness change in this decade.
It’s important to consider the before-and-after of the financial impact of these disruptions. The global music market was $28 billion in 2000, compared to $15 billion in 2014. The trading floor of NASDAQ did $9 billion in business in 2000, but only $2.5 billion in 2014.
The Changes in E-commerce
E-commerce retail sales were .09 percent of retail sales in 2000. By 2014, that number was nearly 6 percent in 2014, even higher today. Keep in mind that 75 percent of future projected growth in retail was in digital shopping. If you shop online, take a look at your own Inbox for tangible evidence of how critical the online market is for LL Bean, Columbia, Best Buy and other stores.
But consider this startling number in finance. According to the Oracle white paper, it took credit cards 28 years to reach 50 million users. But contactless credit cards took only four years to reach the same 50 million threshold. (Source: Banking 3.0 by Brett King).
Digital Strategies for Banks
Oracle outlines four key digital strategies for banks:
- Launching a Digital Brand: Overseas digital banks seem to be ahead of the curve here, helping them reach across markets. Key to this is making the onboarding process more customer-friendly. And as strictly-digital banking players, they’ve been able to be more competitive on price. The result means broader adoption.
- Digitizing Processes: Establishing new digital processes that allow banks to compete and meet the expectations established by grounded digital competitors, like UBank in Australia and mBank in Poland.
- Modernizing the digital experience: Community bankers here in the states may find their digital processes somewhat dated, not reflecting the changes in tech impacting the profession, like “responsive design, the ability to go back and support mobile devices, the Internet of Things (IOT) and other advances. Banks must constantly be on the cutting edge of changes in technology to better serve their customers.
- Launching a new digital capability: These capabilities are not part of their Internet banking, but an add-on, like a mobile wallet,
There’s another component of digital strategy that is often overlooked in the examination of technology. How does the brick-and-mortar branch fit into the digital strategy? A key is to make sure the interaction between digital and branch is seamless.
And it’s important to remember, as the population ages, your customer base relies on traditional branch banking. But it’s also critical to see this as an educational opportunity, to draw older customers into your digital effort
Oracle’s bottom line assessment? “So, the pace of change is getting much faster and the financial services industry has to adapt if banks are to succeed and survive.”
Read the entire Oracle white paper here: http://www.oracle.com/us/industries/financial-services/efma-digital-transformation-wp-2904165.pdf
Banks will be changing and so will their bank marketing. Let us know how your bank is making the change.