3 steps to becoming an industry leader in the platform era
The platform era is here to stay, and that means traditional banking will not survive. Making the shift from disconnected channels to banking that’s architected around your customers and members is the key to becoming and remaining an industry leader – and helping your users improve their financial wellbeing in the process.
Content Marketing Manager, North America at Backbase
In the last decade, the banking industry has experienced end-to-end disruption in customer experience and expectations. Having multiple ATM locations and low fees are no longer the deciding factors for people when choosing where to bank. Instead, they focus on the experience you’re able to provide. Mid-market financial institutions can no longer rely on what used to be innovative 30 years ago because it doesn’t translate into the seamless, digital experiences that consumers have become accustomed to in today’s age. An entirely new era in banking has arrived, and the good news is, that succeeding in this era is only a platform away.
What is the Platform Era?
Platformification: creating a single platform that integrates services from banks, fintech companies, and “non-banks.”.
Platform technology has found its way in almost every industry – retail, technology, food, and now finance. Companies like Netflix, Spotify, and Uber have raised the bar for providing a valuable user experience by creating superior journeys built around their customers and their needs. So it’s no surprise that they expect the same simplicity for their finances, whether that’s buying a house, sending a child to university, saving for retirement, or paying off debt.
This platform model has put a lot of pressure on financial institutions to let go of the traditional, channel-first banking model they’ve been using. Over the last few decades, traditional banks and credit unions have been incrementally adding digital channels and products as they came along. The problem is that these channel systems were never designed to service the user holistically – leaving financial institutions struggling to unite them and creating broken consumer journeys in the process.
By embracing a platform-based model, banks and credit unions are able to shift from legacy core systems, center all their efforts around their customers and members, and move away from a “product mindset” to “platform thinking.”
Although fintechs, neobanks, and online-only banks are gaining market share, it's still possible for banks and credit unions to be industry leaders.
How to Succeed in the Platform Era
1. Prioritize the customer experience
While many financial institutions are starting to increase their innovation budget, they often forget to center their transformation efforts around their users. Consumers are increasingly relying on banking websites and mobile apps, not only for routine transactions, but also for more complex interactions like taking out a loan, and they want to do it with the same ease as ordering a meal from Uber Eats or streaming a movie from Netflix. To win back market share and compete with online-only banks and fintechs, community banks and credit unions need to align their digital strategies with changing consumer expectations.
This means that they must create personalized, tailored experiences that let users know their institution is aware of their financial situation and has the solutions to help them improve it. This could include the products that are promoted while they browse the app or the insights and suggested actions they receive when communicating with employees, as customers increasingly expect these services. In fact, studies show that over 40% of consumers consider it valuable to receive financial insights based on spending patterns and be presented with product offers based on financial situations.
2. Partner with fintechs
Fintechs have become a part of consumers' everyday lives, so it’s not surprising that people expect them to become a part of their finances and banking. Although fintechs and banks have historically been competitors in the financial services space, both have realized that coming together as partners can be more beneficial for both. Both sides are recognizing there’s an urgent need to partner up before they both end up without a seat at the table.
It’s essential for banks and credit unions to form partnerships with fintech companies to create user journeys with a seamless experience between the digital and physical world. Continuing to operate or attempting to build on top of legacy infrastructure often results in multiple point solutions that create a disjointed experience that’s not only frustrating for the customer, but doesn’t align with people-centric values.
By collaborating with fintech solutions that offer pre-built integrations and open technology, financial institutions have the flexibility to innovate on their own terms and timeline, implement custom user journeys, build valuable features, and nurture the employee-consumer relationship.
3. Leverage the Power of Data
Banks and credit unions have a huge competitive advantage over neobanks and newcomers: the mountain of first-party data that’s created from their customers. Unlike a new fintech entering the market, these financial institutions have collected a large amount of data that can be used to build long-lasting relationships based on trust and understanding.
This data enables financial institutions to collect and find actionable insights such as patterns, associations, and changes – allowing them to segment prospects and current users by their most significant problems and provide product suggestions and upsell opportunities tailored to their financial circumstances. Leveraging this data in a timely and strategic manner to improve trust and experiences is what innovation now looks like for financial institutions.
The platform era is here to stay, and that means traditional banking won’t survive. Making the shift from disconnected channels to banking that’s architected around your customers and members is the key to becoming and remaining an industry leader – and helping your users improve their financial wellbeing in the process.
How Backbase can help
We’re the creators of the category-leading Backbase Engagement Banking Platform, with solutions to help financial institutions re-architect their banking around their customers and members. Our platform enables banks and credit unions to supercharge the entire user lifecycle, move faster than their competitors, and create 10x better banking experiences. Elevate your entire online experience with personalized digital services and trusted, personal advice on-demand to help you serve and support customers and members when it matters.