It’s clear that digital devices have become the go-to method to conduct nearly every kind of transaction, whether it’s shopping, streaming movies and music, ordering food, or planning a trip to northern Michigan.
In fact, smartphones have become an indispensable tool for consumers, accounting for nearly $100 billion in U.S. retail sales last year, according to Forrester’s 2018 Retail Best Practices: Mobile Web study.
As part of the transformation, customer expectations of banks, informed by their experiences with digital natives such as Google and Amazon, are significantly higher. Today, Michigan residents simply expect the same convenience and accessibility managing their money as they do in any other aspect of their lives.
We have seen the hospitality, entertainment, and transportation sectors – among others – completely disrupted. Big-box retailers have been forced to adapt or go out of business.
What about banking? Banks can survive and even thrive in the digital transformation, but only if they make the right moves.
As industries in Michigan continue to develop the technological innovations required for an increasing number of high-paying, digital-first jobs, it is clear the state is well-positioned to continue its long tradition of innovation. In the beginning of the 20th century, Henry Ford revolutionized the manufacturing business model by developing the assembly line in Michigan. Today, the state is home to one of the country’s highest concentrations of workers in science, technology, engineering, and math.
A growing number of financial technology companies, or fintechs, have recognized how digital technology and finance could work together to create products to address the evolving needs of customers. They lack scale, however, and want no part of the regulation that governs more traditional financial institutions. Many banks have viewed fintechs as disruptors, but smart banks see the value their innovation can bring to customers and are moving decisively to integrate cutting-edge outside technology into their offerings.
Whether by partnering with fintechs or developing their own solutions, most banks are moving quickly to invest in digital capabilities that provide similar kinds of frictionless customer experiences that resonate with customers in an increasingly digital marketplace.
In the consumer banking space, there are several high-profile examples:
- Goldman Sachs’ “Marcus” digitally offers no-fee personal loans and high-yield savings accounts;
- and Bank of America’s “Erica” is an A.I.-powered virtual assistant that enables banking via voice command, text or through gestures.
And in commercial banking, there are many new platforms for trading, cash management, and payments.
Fintech partnerships should be grounded on an appreciation of change, and how to facilitate the right developments. But it’s crucial for business leaders to make sure a partnership is solving a problem for the customer and not just done for its own sake.
It is also important that these partnerships with fintechs are not simply marriages of convenience but reflect a genuine cultural shift for banks. A comprehensive approach on innovation not only will create a fast, seamless digital experience for customers, but a more efficient and creative company culture.
We have found that keeping pace with technological change requires an “all-hands-on-deck” approach. Smart thinking and great technologies, whether from inside an organization or from a third-party, will always represent an opportunity for growth and delivering greater value to customers.
But even in our digital-first world, nothing replaces trust. And while the digital revolution in banking is under way, there are surely many major changes just on the horizon. By staying on top of the competition and constantly evaluating external solutions and opportunities, forward-looking banks can find the right model for modern consumers looking to manage their money better.
Moving forward, it’s apparent that while technology has certainly changed, customer expectations of banking haven’t. Fundamentally, customers want a trusted partner. Smart banks have been able to retain what has been best about banking while offering the kind of digital experiences that big tech companies have been providing.
Today, these banks are adapting to the needs of customers in our digital-first economy by developing solutions that deliver a superb customer experience. The pace of technological change is accelerating, but as customers in Michigan increasingly use new channels to access their finances, smart banks are rising to the challenge and providing customers with the best tools to help them reach their potential.
Richard C. Hampson is state president and head of commercial banking for Citizens Bank, Michigan in Southfield, which is part of a commercial bank holding company headquartered in Providence, R.I.