For many financial institutions (FIs), the past months have been a whirlwind of adaptation. The COVID-19 pandemic has challenged their business models, impacted their employees, and given their account holders a new set of needs to navigate. By distributing Paycheck Protection Program (PPP) funds for businesses and offering skip-a-pay and other beneficial services, FIs have been doing their part to help keep the economy afloat.
Competition hasn’t disappeared
Rather than embrace the novelty of flashy fintech tools, both businesses and consumers are turning to their FIs for guidance throughout this crisis. Small businesses report increased trust in their financial institutions and feel that they’re receiving vital information from their FIs.
But as some semblance of normalcy eventually returns, FIs will once again have to face off against fintechs and refocus their business on competing in a crowded market. Here are a few things that FIs should consider as the pandemic unfolds, and we approach that new normal.
- Lead with digital
Before the pandemic, a slow and steady march toward digital seemed like enough, but the sudden, increased dependency on mobile and online channels won’t likely be going away. Users will continue to use digital channels, and FIs will be expected to keep pace with the ubiquitous, easy-to-use digital experiences their account holders have grown used to (such as Amazon, Apple, and Netflix). To keep up, FIs will have to reevaluate their processes and embrace new solutions.
- Leverage innovation to increase revenue
Fintechs and other competitors will continue to represent a threat to account holder growth and retention. Whether they partner with fintechs, build in-house solutions, or work with tech vendors, FIs must provide account holders with leading-edge digital products to compete and develop new revenue opportunities.
- Build emotional connections
Even before the pandemic, in-person banking was decreasing while digital banking was on the rise. Conventional wisdom has long held that relying on automated systems and technology means sacrificing deeper account holder relationships. Fortunately, the right kinds of technology (think AI, biometrics, and account holder data) used correctly can bridge the digital divide and provide rich, personal experiences. Automation can also streamline back-office processes, helping FIs keep their focus on account holders.