Digital banking pressures major lenders to adapt
At a time when consumers are increasingly used and embracing the new digital lifestyle of the COVID era, pressure is mounting on traditional large lenders to accelerate their innovations – or become obsolete.
In remarks made at the annual conference Sibos Global Financial Services Conference, Monday, October 5, JPMorgan CEO Jamie Dimon said banks that fail to adapt to their customer relationships will follow the dinosaurs’ path.
“Banks are good at creating weak spots by forcing customers to sign multiple forms and documents, Dimon told Sibos attendees. “We are now doing a much better job with easier, faster and faster transactions. We need to do more. “
Dimon’s comments come at a time of aggressive growth and earnings from many digitally native startups that have modernized and streamlined online banking and payments for the general public.
For example, Chris Britt, CEO of Chime recently said that unlike traditional banks that earn money on fees and interest on loans, his business’s profits come mostly from the use of cards.
“Nobody wants to go to bank branches, nobody wants to touch cash anymore and people are more and more comfortable living their lives on their phones,” Britt said. CNBC. “We have a website, but people don’t really use it. We are a mobile app and that’s how we deliver our services. “
Of course, the pandemic has forced banks – like all businesses – to rethink their priorities and adjust their interface with customers.
According to an August study on digital bank Through PYMNTS, banks are closing physical branches, reducing hours of operation, and encouraging customers to use their websites or mobile apps to complete transactions and reduce face-to-face interactions between customers and staff. In addition, the report says, services that were once only available at branches, such as loan or credit card applications, are being moved to mobile apps and ATMs.
At this point, even clunky old ATMs are undergoing an extreme makeover that will transform those ubiquitous bunker-shaped silos into stand-alone tablet stations designed to attract and retain customers, also offering the possibility of contactless banking. .
Monday (October 5) NCR Corp. unveiled its next generation of ATM operating software, designed to bring decades-old cash dispensers into the digital age.
The Atlanta-based company noted in a press release that its Activate Enterprise NextGen ATM platform was designed to be fast and simple.
“This new software expands the user experience and expands the digital capabilities of ATMs,” Frank Hauck, president and CEO of NCR Corporation, said in a statement. “In the future of banking, we see the ATM becoming a dynamic, digital, self-service platform on which banks can rapidly deploy new services.”
To be fair, it’s not like banks are ignoring technological change. PYMNTS search shows that 89% of U.S. bank customers use mobile banking apps to manage their accounts, with 94% of mobile banking users completing at least one transaction per month. Experts predict that this trend will continue to grow to the point that half of the world’s population – some 3.6 billion people – will likely use online and mobile banking by 2024.
But even as the lines between old and new banks blur, the Studies show that consumers still overwhelmingly view banks as a place to store and save money, and that physical branches are still one of the most important services banks can provide.
Demographic issues are also distorting the evolution efforts of the country’s largest banks, as PYMNTS research shows that while affluent consumers primarily do business with national banks, credit unions, and digital banks, low-income consumers tend to use regional and community banks, or PayPal.
Add in generational preferences for digital products, along with the tighter regulatory and oversight requirements that domestic banks face, and it becomes clear that the effort to refresh the big and old banks won’t be an easy task.