As digital banking and payments become mainstream, financial institutions (FIs) are stepping up their efforts to improve customer engagement (CE). The moves comes as consumers expect excellent product experiences as compelling new business models and product-level innovations come to market.
In particular, CE-focused FIs are more likely to have recently concentrated in areas such as payments technology, mobile payments and analytics than non-CE-focused FIs: while 63 percent of the former said they focused on mobile and digital payments innovations, only 53 percent of the latter did the same, according to the PYMNTS Innovation Readiness Playbook.
Going forward, FIs are focusing on areas such as digital wallets, while beefing up their loyalty programs. Here is how FIs are focusing on these areas – and improving customer engagement.
More than half – or 56 percent – of FIs plan to focus on digital wallets over the next three years. That statistic comes as half of all online spending will come from mobile over the next two to three years, according to Jon Rosner, vice president of product strategy, card services at Fiserv. In-app payments have seen strong adoption, and the Pays (Apple, Android and Samsung) can help make that even easier by enabling users to enter credentials once and skip the hassle in the future.
A little more than one third – or 35 percent – of FIs plan to focus on peer-to-peer (P2P) payments over the next three years. With Zelle projected to overtake Venmo, for example, eMarketer expects the payment service to grow more than 73 percent this year. The firm is projecting that Zelle will reach 27.4 million users in the U.S. — more than Venmo’s 22.9 million users, according to reports.
Thirty-nine percent of FIs plan to focus on loyalty over the next three years. Bank of America, for example, in September announced the rollout of its new Premium Rewards credit card that offers customers unlimited points that never expire. In announcing the news, the financial company said that in addition to unlimited points that have no expiration date, the card offers flexible rewards and premium travel benefits.
Thirty-five percent of FIs plan to focus on real-time payments over the next three years. And, in 2017, the first new payment and clearing system in the U.S. in more than 40 years was up and running with a new “Real-Time Payments” system set up by The Clearing House. In all, a transfer took three seconds with the system — as opposed to the hours or days more typically associated with an ACH transfer.
A little more than one quarter – or 28 percent – of FIs plan to focus on contactless over the next three years. Diebold Nixdorf, for example, showcased the future of banking and payments at a Possibilities Lounge at U.S. Bank Stadium in February. In the lounge, guests had the opportunity to try out a contactless payments experience with a radio-frequency identification (RFID) sticker representing a wearable such as a smartwatch.
In the future, FIs may increasingly focus on customer engagement as they amp up their technology efforts. While 35 percent of FIs reported having focused on CE during the past three years, 43 percent of FIs said they intended to focus on CE in the next three years.