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Getting with the Times: Driving Satisfaction Through Financial Technology Innovation

As digital banking grows, financial institutions must innovate or risk attrition. Here’s where FI customers and members most want that innovation.

Todd Weiss
Todd Weiss
VP Product Management
Read Time
3 mins
Last updated
Mar 1st, 2022

The growth of digital consumer banking began well before COVID-19 arrived, but it has strikingly accelerated since the start of the pandemic. With some bank and credit union (CU) branches shuttering temporarily in 2020, customers turned to online portals and apps to handle their money, and they have steadily increased their dedication to technologically assisted banking ever since.

A survey of 400+ financial institutions (FIs) by Engageware found that self-service activity on bank and CU websites shot up 69 percent in the pandemic’s first year, along with an 82 percent rise of self-service activity on banking apps. With this trend on the rise, FIs need to innovate to keep up with digital-savvy competitors and stay on top of relentless technological developments.

What is the innovation imperative for financial institutions?

FIs that are slow to innovate may find dissatisfied customers and rising attrition. CUs, in particular, are in danger of being left behind in the wake of broader financial innovations. According to a survey of almost 5,000 U.S. consumers by PYMNTS, 79 percent of CU members want their institution to innovate, and 22 percent would consider switching CUs if theirs doesn’t.

Fintechs represent a particular threat to small FIs, especially CUs that have historically depended on community-mindedness and customer service to compete with traditional banks. While members like those qualities, they prioritize fast and convenient digital services that fintechs have pioneered.

Stephen Kuhl, head of financial institutions and strategic partnerships for Western Union Business Solutions, says FIs must embrace technology: “As fintechs expand their influence and increase market share, innovation represents more than a path to success — it’s the one and only road to survival.”

woman pointing

What are the barriers to innovation for financial institutions?

While fintech companies are known for blazing new trails in banking, other FIs, particularly small, community-based organizations like CUs, have a reputation for being less innovative.

These institutions may face logistical challenges barring their entry into more innovative financial products, such as a lack of budget to invest in technology development or having repetitive daily tasks that bog down their IT resources. It is also challenging to innovate with remote employees, a problem cited by 81 percent of CU executives in the PYMNTS survey.

PYMNTS found another problem for CUs is not so much lack of innovation as it is the wrong kind of innovation. For example, 86 percent of CUs developed mobile wallet services despite only 17 percent of their members voicing a desire for such technology. Similarly, 77 percent invested in creating new capabilities for mobile banking when only 23 percent of their members wanted them. Other areas where CUs have innovated without the interest of their members are peer-to-peer payments and installment credit.

44 percent of customers would find it extremely valuable to set up direct deposits in an app and 39 percent want real-time mobile transfers to an external bank.

What are the financial innovations customers want from their banks and credit unions?

Banking customers highly value security features, the ability to move money around, and the convenient execution of various banking tasks.

A study by Insider Intelligence found that 37 percent of customers deem security features “extremely valuable.” Around 40 percent would value using a banking app to order a replacement debit card, confirm login on an unfamiliar device, or dispute a transaction.

Options for digitally moving money were also popular, with 44 percent saying that it would be extremely valuable to set up direct deposits in an app and 39 percent desiring real-time mobile transfers to an external bank. Other popular financial innovations are stopping payment on checks digitally and scheduling mobile payments before the funds are available.

OpCon has you covered

Workload process optimization is a key tool enabling FIs to offer streamlined, digitized banking services to their tech-savvy customers. A tool like OpCon can automate repetitive tasks, limit employees’ need to deal with IT, and let the IT team put its expertise toward higher-value work.

As FIs work to innovate and meet member and customer expectations, workload automation and orchestration (WLA&O) can provide the support to make it happen. Contact us for more information on how to free your valuable IT resources from low-value work so they can focus on the digital transformation initiatives that will put you ahead of the competition. Speak with an SMA Technologies automation expert today!

In this article

Studies show people are increasingly prioritizing digital capabilities in their banking needs. Learn how to drive member satisfaction and loyalty by targeting your innovation efforts where members want it most.

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