In A Decade of Digital Transformation in 12 Months, 46 C-suite executives spoke with PYMNTS for its Q2 eBook on what the world will look like as recovery rolls on and the next iteration of normal rolls out. In this excerpt, Tom Gandre, EVP and chief operating officer of PSCU, discusses how digital-first strategies have now pivoted to become “digital-always” strategies, and how banks must address this shift to compete.
Read the entire eBook here.
From contactless cards to mobile wallets and digital issuance, the payments industry had front-row seats to a year filled with digital transformation and innovation. Even before the onset of the pandemic, shifting consumer preferences were becoming apparent in the financial services space, with more consumers adopting online banking, downloading payments apps and changing the ways in which they interact with their financial institutions (FIs). Fast-forward to today, and these changes have become permanent habits and ways of life. Digital-first strategies have now pivoted to become “digital-always” strategies.
Over the past 12 months, many consumers were introduced to contactless cards, mobile wallets and other solutions that they soon discovered were easy to use, fast and convenient. Tap-and-go offerings gave consumers another option when it came to making payments, while digital issuance provided them with the opportunity to continue transacting even in the absence of a physical card. Buy now, pay later (BNPL) offerings allowed for flexibility in when and how to pay for purchases – as well as the capability for on-the-go budgeting, whether post-purchase, during purchases made online or at the point of sale.
Some consumers may opt to conduct routine banking activities online exclusively moving forward, never stepping foot in a branch again. Armed with tools that make payments and other financial activities easier, many experts – and supporting data – predict that usage of these types of digital offerings will only continue to increase among consumers as we look to the remainder of 2021 and beyond.
According to population estimates from the U.S. Census, millennials overtook baby boomers as America’s largest generation in 2019, which means financial services providers must have a strategic focus on this generation of digital natives, as well as future generations for whom digital is already the norm. Similarly, younger millennials are the most avid users of mobile banking technology, with 87 percent of credit union members saying they make payments or do banking on their mobile phones, according to PSCU’s 2020 Eye on Payments survey.
To meet these needs and those of other generations, credit unions (CUs) and other FIs should harness the data they have gathered about their members and customers, respectively, to understand how they interact with their institutions and where they are in their financial journeys. Leveraging customer data to anticipate their needs, FIs are poised to deliver a personalized experience through their customers’ preferred channels to connect with them with relevant opportunities.
The shift to digital is here to stay, and should be at the forefront of all FI initiatives. Those not addressing this shift are likely to experience attrition, as consumers choose instead to conduct routine banking activities with FinTechs or other FIs that provide the digital solutions and personalized services they now expect.
The financial services marketplace is crowded, with innovation playing a key role in who succeeds. FIs that are not willing to prioritize and invest in digital solutions and other payments innovations will ultimately fall short of evolving consumer needs and expectations.