The pandemic has pushed digitization from a “nice to have” to a “have to have” for consumers all over the world and across all age demographics.
But as Karen Webster noted in a recent On the Agenda conversation with a panel of industry experts, a funny thing happened to consumers on their way to the digital forum. Digitization shifted from something they had to do to something they wanted to do, and their preferences began to shift to businesses that could do digital better.
Webster told panelists that that leads to an obvious question: On a scale of one to five, how close are financial institutions (FIs) getting to actually helping consumers on their journeys to digital-first lifestyles?
The panel — Ondot CEO Vaduvur "VB" Bharghavan; Doug Brown, senior vice president and general manager of digital banking at NCR; PSCU CEO Chuck Fagan; and Scott Zimmer, executive vice president, innovation and experience design officer and head of venture investing at Truist — said that’s hard to answer. While no one gave FIs the lowest possible score of a one, most only gave the industry a two or three.
NCR’s Brown broke his answer into two parts — “digital” and “digital first.”
“On digital, I think we've arrived in that we're doing strongly in the digital domain,” he said. “So, I'm going to give us a four for that traditional digital self-service, end to end on the whole. Then when you get into digital first and where we're combining those things of what we'd like to describe as ‘phy-gital’ into digital, that's where we're not doing as strongly. That's a 2.75 to three, because that part is much more complex. You've got to unwire the whole enterprise — both its technology stack and its culture.”
The panel said you then have to rebuild the enterprise into something that not only does more than it does today with digital delivery, but also expands the purview of what can be done and expected among consumers.
Panelists said we’ve seen green shoots of that enhanced digital-first experience with things like the Apple Card and Venmo’s soon-to-be-released card. But PSCU’s Fagan said making those upgraded experiences truly ubiquitous will be a longer, more-complicated effort.
“If we fixed things to the degree we can solve for 90 percent of use cases, the reality is that’s not good enough,” he said. “The digital solutions have been ubiquitous. We have got to solve for 100 percent of use-case scenarios of the journey. I think it's a great challenge and it's got to be paced as financial institutions, in some cases, are working with four generations of consumers they're catering to. Getting the teenager to come along on that journey is very different than getting our fathers on board.”
But panelists added that it’s a journey that consumers will take — and if anything, are picking up speed on — whether FIs meet customers’ needs or not. The group agreed that whether FIs ever get to a perfect five rating when it comes to digital-first service is uncertain, but the journey has become mission critical.
Customer Demands Are A Moving Target
Still, Fagan added that the more that digitization advances, the more demanding customers will become.
“I don't know that a five is even possible,” he said.
Ondot’s VB agreed, noting that what we perceive a five as today might be less than that in a few years as technology advances and our perception of what’s possible expands.
“When we were all using our flip phones in the early 2000s, we were pretty happy with those Nokias and Motorolas, right? They were pretty good for what they did,” he said. “Then Apple came and totally changed the definition of what a great mobile experience really was. I think that definition of five keeps changing. So, when we look back on this two or three years from now, [we’ll] go back and say, ‘Oh shoot, that was actually a two?’”
Brown said it’s best to think about innovation in financial services like a world record in sports. Someone sets the bar for what the best possible is until someone else comes along and moves the bar higher.
Building What Works
When one looks at the history of mobile wallet among U.S. consumers, important points distinguish the ones that succeeded (like the Starbucks mobile wallet) from the ones that quickly bowed out (like Uber Money).
“The challenge was in trying to tackle the wallet space with uniquely defined wallet propositions,” Truist’s Zimmer said. “Starbucks works great because it held a unique characteristic with its loyalty program. [But] I think a lot of people were chasing that wallet ecosystem — which I think Uber Money was a representation of — that didn't make it because it didn't extend itself out to a broader need.”
He added that banks can take their cue on what does and doesn’t work by watching what FinTechs do.
“What the FinTech community really is doing [is] addressing things that banks have been too slow to address,” Zimmer said.
That means banks can see what works for FinTechs and what doesn’t and learn what to develop.
“We're seeing things that customers want that banks [can] look at bringing to their clients as well,” Zimmer said. “I hope we continue to see innovation here because the client ultimately wins — and banks that are [paying attention] can really be evolving more quickly than ever.”
VB added that we're seeing advances rolling in from various digital players who are upgrading their financial services experience, like Apple. He said some of those advances, like the instant approval and provisioning of a card to the digital wallet, hook consumers on those experiences.
“I think you bring in a ‘wow’ factor, and then you keep consumers with utility and engagement,” he said. “What I hope we are seeing is a change in the way financial institutions think in terms of what the new normal is for engaging with consumers across the board.”
FIs Are Finally In The Game
But PSCU’s Fagan noted that FIs are already thinking about their digital offerings differently than ever. He said that a year ago, the questions were: “What is it going to take to get the enrollments up?” and, “What is it going to take to get the utilization engagement where it should be?” The pandemic has answered those questions in one fell swoop.
VB added that the challenge in pushing financial services toward that perfect digital five had been inertia; efforts are now moving forward.
“Unless there's friction to stop it, things that are moving want to keep moving, [and] I'm all for positive inertia in financial services that will keep things moving,” he said. “We have to be agile, and I think the environment is very supportive of that. And we have to keep looking to reinvent the way we do things — sometimes out of necessity, but more and more often out of choice.”