by Pamela Michaels Fay
These days, financial branding isn’t just about a well-known name, a recognizable logo or even a broad range of products and services. Rather, it is about creating the experience that users expect their banks and credit unions to provide. The pandemic-driven push toward digital banking sends a clear signal that today’s financial clients are not only all in, they want more. As companies prepare for what lies ahead, digital banking is forcing many banks and credit unions to rethink and rework their branding to better serve changing user needs.
The future will be disruptive for sure. So what’s a bank or credit union to do to maintain viability in the coming years? Fortunately, intelligent financial branding strategies can improve user relationships and strengthen incumbent banks and credit unions.
The State of Consumer Banking
Coming out of the first two years of the pandemic, traditional financial institutions are no worse off. But according to McKinsey, they weren’t exactly well-positioned going in. Profitability held, but slightly over half of all banks operate with a return on equity below the cost of equity.
McKinsey says that although the global industry may be set for a recovery, it’s far from attractive to investors, but innovative business-model changes will serve the incumbents well. This includes digital experiences that go beyond basic banking, including agile marketing strategies and the ability to leverage the newest technologies.
Are Users Leaving in Droves?
Switching from banks to other financial institutions actually declined by 30% during 2020 and 2021. But people do switch and will continue to do so. During the pandemic, when users were forced to go online, they came with high expectations. It was during this period that many banks and credit unions had the opportunity to serve their users online for the first time, handling their stimulus-check deposits and helping to keep their day-to-day financial dealings running smoothly.
In some cases, user loyalty was cemented. Others? Not so much. With the competition growing and more businesses online each day, the bar is set high. Users, even those who never even thought to bank online, recognize a good online experience when they see one.
But switching banks is not like buying a pair of slippers or a board game. It’s not so easy to change all of your automatic payments, direct deposits, beneficiaries and so on. Still, people do switch, particularly those under the age of 55, for access to coveted digital features. It’s no longer sufficient to simply have a digital solution. Today, banks and credit unions must be able to fully serve their clients online.
The Bank and Credit-Union Advantage
It may seem that balance-sheet-reliant traditional banks and credit unions have no advantages over the neo-banks and industry disruptors. But these incumbents have a lot to offer. In addition to a variety of products and services, many banks and credit unions have the benefit of years of experience, mountains of historical data and a rich legacy of service to the community. Users have trusted them for decades and rely on their expertise and stability. Still, they can’t rest on past successes.
The road map for the digital future relies on delivering solutions that make users’ lives better and easier. That’s a tall order — and a huge opportunity — particularly when 73% of Americans rank money as the No. 1 stressor in their lives.
Banks and credit unions must create brands that consider usability first and foremost. That’s where digital UX comes in. But it goes beyond just great design. Financial institutions must deploy user-centered thinking across all of their processes. In this way, they can deliver personalized insights and recommendations, helping to improve their users financial health and supplying them with the products and services they need before they realize it. Here’s how banks and credit unions can use user-centered digital UX to generate brand equity.
Do the User Research
It’s true, AI and machine learning will provide personalized insights and help you make recommendations. You need this information. But before you spend big bucks on big data, use the information you have readily available. As you design the user experience, pay attention to app ratings and comments on Google Play and the App Store, as well as on social media and in forums. You can also look at user lifetime values, call-center logs and retention rates. Read user letters, suggestions, complaints and recommendations. Users will freely let you know if you are meeting their expectations.
Revisit Your Existing Solutions
The best digital processes are client-centered. It’s not enough to simply digitize your existing processes. In the rush to implement digital solutions during the pandemic, banks and credit unions may have overlooked the actual end user. Revisit and rethink what’s already out there. Is it the best design? Is it efficient? Does it meet user expectations? If the methodology is poor, the outcome will disappoint users. Disappointed users know that there are better solutions available.
Work Toward Unification
Once you’ve gathered insights, you’ll be able to take action. If there is friction in your existing processes, determine how to remove it. Users don’t care about your organizational structure or who is responsible for what. To them, it’s all one bank, one credit union. Their transactions must be seamless. In order to have a cohesive process on the outside, you must ensure that the internal process flows smoothly. If you don’t already have process owners, you need them. They can work across departments and functions and provide a unified vision.
Build Emotional Connections
How do you go from being an also-ran digital banking solution to being a beloved financial institution? You need the ability to build an emotional connection. When users no longer visit branches or service centers, the connection must come from interactions with the technology. If the financial branding and the communication is purely functional, there won’t be an emotional connection.
Emotional connection comes from a personalized experience. That means providing solutions to users when they need them. It’s understanding the context and offering to solve problems. Brands that have an emotional connection generate 306% higher lifetime value, according to Motista. This goes beyond satisfaction. It’s about consistently meeting the user’s needs by giving them tools they can use to feel in control of their financial well-being.
Create Third-Party Partnerships
Many banks and credit unions do not have the ability to build out the technology needed to use innovative new technologies, like artificial intelligence and machine learning. These institutions rely on third-party solution providers. Technology elevates the banking experience so that users are treated as individuals. The demand for UX and CX experts is growing as the field becomes increasingly specialized. These experts understand how to build a user-centered solution.
Progressive banks and credit unions will increasingly partner with fintech and technology companies to incorporate third-party solutions and deliver added value to their clients. Collaboration and the timely integration of leading-edge technologies will be the path to a viable future.
Here are just a few of the trends we expect to see:
- The prevalence of bespoke experiences using AI, such as Chase’s Digital Assistant
- The cultivation of enduring relationships with the next generation of affluents, who don’t yet have the wealth needed to work with financial advisors
- The growth of the super-app ecosystem and the development of the role that traditional banking will play
- The rise in open banking and the use of data to extend user engagement beyond traditional bank offerings
As mentioned, banks and credit unions already have a rich history and experiences that can be leveraged. Users will look first to the institutions they already trust to lead the way. Are you prepared to build your digital brand for the future? Contact Lumin Digital for a demonstration.
Pamela Michaels Fay is a business, financial, technology, legal and lifestyle writer, whose work is informed by over 20 years of strategy, leadership and organizational development consulting for Fortune 500 companies.
Forbes – Digital Banking Trends Evolve In 2021, But User Needs Stay The Same
McKinsey – McKinsey’s Global Banking Annual Review 2021
AltFi – Bank account switching plummets 30% in pandemic squeeze
ABA Banking Journal – Survey: Younger Users More Likely to Switch Banks for Better Digital Features
Best Money Moves – 5 Financial Stress Statistics for 2021
PR Newswire – New Retail Study Shows Marketers Under-Leverage Emotional Connection