Banking in transition: When was the last time you visited your bank? By David Werner - Park Bank
The convenience and ease of 24/7 access and mobility are innovating the world of banking at a rapid pace. According to Gartner and IDC, by 2018 banks and financial institutions’ clients will access and contact their banks mainly through mobile devices. While online and mobile banking adoption has been rising, the number of bank branches across the country has been steadily declining.
Role of brick-and-mortar banks is changing
While this trend doesn’t mean a total elimination of brick-and-mortar banking, it does mean that bank leadership is rethinking branch size, layout, hiring, staffing, training and services. For example, routine transactions can be handled by advanced ATMs or self-service kiosks. Personnel at new, right-sized branches require a broader skill set to manage multiple responsibilities and more complex transactions with customers, such as helping with key life decisions. This makes the face-to-face interaction with customers extremely critical and differentiating. We see this trend as a net positive for customers who desire a mix of digital services and human interaction and can decide on their own how and when to bank.
Fin Tech firms offer innovations
A wave of financial technology (FinTech) startups has also impacted financial institutions of all sizes. One of the fastest-growing areas for venture capitalists, FinTech describes an emerging financial services sector that creates computer programs, apps and other technology to support, enable or replace traditional banking and financial services. FinTechs spur new innovations in areas such as money transfers, payments, lending, investing and security by integrating into the lifestyles of tech-savvy and sophisticated customers. Venmo, Kabbage, SoFi, Wealthfront and Acorns are some of the more well-known companies, but it is estimated that there are more than 1,000 such startups.
Many FinTech companies compete directly with financial institutions while others complement banking services, providing an opportunity for banks to deliver new technology without the startup investment outlay. By partnering with FinTechs to offer the latest innovations, financial institutions are able to stay relevant and appeal to a growing market.
Faster payments elevate need for cybersecurity
Much of the technological innovation in banking is focused on payment processing and cybersecurity, and they go hand in hand. As banks implement faster payment systems such as same-day ACH for businesses, mobile deposit, digital wallet and person-to-person, the opportunity for cybercriminals grows as well. As a regulated industry, financial institutions have traditionally been leaders in cybersecurity and will continue to be diligent in protecting customers’ financial information and assets.
I have heard this wave of technological innovation referred to as the “fourth industrial revolution.” It will fundamentally alter the way we live, work and relate to one another impacting not only banks, but how all business is conducted. By adopting some of these innovations, community banks like Park Bank are able to offer the best of both worlds to customers: the ease of access and control over their information and money with personal, face-to-face relationship-building conversations and advising. Is your business preparing for this revolution?
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