The relationship between the banking industry and consumers is ever changing, and for decades, banking was a fairly straightforward task. Customers would visit a branch to make deposits, open or close accounts, apply for loans, or withdraw or transfer funds. However, as demographics change and technology advances, banking products and services adapt to reflect these shifts, and meet consumer demand. In this blog, I’m going to discuss a few banking products and services I believe are becoming less popular, as well as products that are on the rise.
Paper checks and paper statements are increasingly less important to consumers. With online and mobile banking, paper checks are no longer a necessity. The same goes for paper statements since consumers now instantly have access to their account statements electronically. I would recommend that banks and credit unions focus on creating incentives for customers to switch over to electronic statements, billing and account management. Not only does it reduce the cost of certain operations, like printing, but it creates opportunities to cross/up-sell relevant products to your current customers through digital platforms.
In contrast, electronic commerce (eCommerce) continues to grow and is not only changing customer buying habits, but also directly impacts the financial services industry. Advancements in web applications, smartphones and tablets caused an increase in mobile payment revenue, which is expected to reach over $1 trillion dollars in 2019. Online and mobile payment services such as PayPal, Venmo, Apple Pay and Square Cash facilitate real-time money transfers between people, as well as people to retailers by using mobile apps.
The increase in electronic payment methods and online banking are the leading causes in the decrease of another popular service: ATMs. ATM use for specific transactions is decreasing as consumers become cashless and use smartphones for many services related to ATMs, like making deposits.
Another product that is slowly declining in the financial services industry is free checking accounts. When Bank of America announced they were no longer offering free checking accounts last year, their clientele was outraged. However, it’s no secret that free checking accounts are not profitable for an institution. I recommend that banks and credit unions evaluate the market to see if a free checking account product should be offered to stay competitive, or change the structure of the product to be less costly to the institution.
Financial institutions should always be aware of who their target customer is, but as generation x and millennials become the majority users of banking products and services, financial institutions have to adapt to their future needs. A recent Gallop poll stated that millennials are the generation most likely to use online banking (92 percent) and mobile channels (79 percent), and they have the lowest level of customer engagement with their primary bank at 30 percent. The bottom line is that millennials rely on digital versus in-person experiences. Financial institutions need to ensure they have the products and services millennials are looking for including, online and mobile banking options, person-to-person (P2P) payment capabilities and the ability to apply for loans and other products online.
Understanding what products and services are increasing and decreasing in popularity is a great way for a bank or credit union to review their products to ensure they are remaining competitive, making profitable decisions, as well as meeting the customers’ needs. All are vital to the success of an institution, and it is often helpful to hire an unbiased third party to review products and services to stay competitive.
Manager Hometown: Tacoma, Washington Alma Mater: Washington State University
Fan of WSU Cougar and Seattle Seahawks. Enjoys cooking and passionate about drinking good wine. Loves landscaping and gardening.