Banking is changing rapidly in the digital age as the industry responds to consumers’ demands for an approach that mirrors their experiences elsewhere – a development that is one of Admap’s Drivers of Change in 2019.

Online-only banks now capture 13% of new deposits in the US, up from 4% in 2006, in a shift that signals how consumers, whose lives are already digital-first in the way they communicate, consume content and date, are willing to embrace new forms of financial services.

“As retail banking continues to evolve, success will be contingent on not only satisfying customer preferences but recognising the intent behind them,” says Tony Hooper, vice president at digital marketing services agency iQuanti, in Key trends driving the banks of the future.

For younger generations who regularly use a smartphone, the mobile experience that brands provide is crucial, but banking has been slower than other verticals to recognise this.

Mobile-only banking options are now expanding rapidly, backed by venture capital investment, forcing legacy banks to accelerate their digital progress to keep up.

Goldman Sachs has developed Marcus, an on online-only brand, for example, while JPMorgan Chase is piloting Finn, a bank for digital natives. And both these are intended to be separate brands under the Chase and Goldman Sachs corporate umbrellas.

This move, Chase managing director Matt Gromada explained to American Banker in June, is a deliberate attempt to make inroads with younger consumers.

While youthful preferences are one reason for creating an online bank, this is also significantly less expensive from both an acquisition and a servicing standpoint, Hooper notes. But a physical presence may still be desirable, even if it’s not in the traditional form.

Capital One, for example, has slashed the size of its branch network at the same time as it is investing in a new kind of physical location called Capital One Cafes, whose ultimate purpose is to streamline the process of signing up for (or managing) an online bank account.

This brings together all of the major trends afoot in financial services, says Hooper – combining physical location with online account management, “and they do so in a modern urban setting that is designed to appeal to consumers who are just starting their financial lives”.

It’s a hybridised approach that could signal a new direction for legacy banks, he suggests.

At the same time, Gen Z habits and preferences could take banking in other directions. “Banking via Snapchat sounds unlikely,” he says, “but mobile check deposit would have sounded just as questionable two decades ago.”

This issue of Admap features 14 articles by thought leaders from across the globe. WARC subscribers can access a deck which summarises the key thinking and advice from all the authors.

Sourced from Admap