Four essential trends for modern financial institutions

Consumers are looking to their financial institutions for resources on financial wellness —especially in current, difficult economic conditions—so staying up to date on market trends is essential.

Four essential trends for modern financial institutions

By Carley Cronic

As the technology landscape continues to evolve, consumers expect their financial institutions to keep up with new advancements and ensure that there are no disruptions to key products and services. While keeping up with evolving technology can seem daunting, focusing efforts on a few key trends and themes can help financial institutions meet their own goals and maintain excellent service standards.

Educate customers in financial wellness

Consumers are looking to their financial institutions for resources on financial wellness —especially in current, difficult economic conditions—so staying up to date on market trends is essential. In an interview with Finovate, Erin Wynn, Executive Director of Product Management here at NCR Voyix, discussed how promoting these resources is mutually beneficial for financial institutions and their end users: “The financial institutions that emphasize building and maintaining relationships, as well as providing meaningful tools and support (such as financial wellness resources), will be better positioned for loyalty and success.”

Doug Brown, President of Digital Banking at NCR Voyix adds to this in a conversation with CUbroadcast, pointing out how this is also beneficial in connecting with younger generations: “The banks and credit unions that are taking steps now to prioritize financial wellness programs and options for their customers and members will be best positioned to support their communities and earn back trust. This is especially crucial as younger generations—millennials, Gen Z and Gen Alpha—determine where their loyalty lies. Those that can use data to personalize financial fitness and offer helpful resources will be best positioned for success,” he noted. Providing resources such as online courses, budgeting tools, and financial counseling services are a few examples of the ways financial institutions can support consumers on their journey to financial wellness. By offering access to these various tools, financial institutions can position themselves to attract more consumers who are in turn contributing to their own success.

Provide a personalized experience

It’s no secret that consumers prefer a personalized experience. Where and how people choose to invest their money is extremely personal. Financial institutions need to take advantage of the opportunity to utilize their customer data to create a more personalized experience. In an article from Bank Director, Brown stated, “The strategic use of data is what directs effective digital-first banking. If a bank harnesses data in the right way, they can uncover critical customer behaviors and channel preferences, transactional patterns and key events in the customer journey. The bank can use these insights to narrowly tailor interactions and improve customer relationships.”

Personalization not only gives consumers a better banking experience, but also gives them a reason to stay loyal to their bank or credit union. “A significant trend we’ve seen is centered around personalization, which really means reminding the consumer that you know and care about them; they’re not just another number. This means creating digital experiences that feel like they’re catered to each user. Financial institutions are realizing that they can’t just compete on low loan rates or high deposit rates. Even if that’s what got the consumer in the door, it won’t be what keeps them there,” Wynn explained.

Create opportunities for gig workers

Members of Generation Z are displaying growing interest in starting their own small businesses or “side hustles”, and financial institutions need to be able to adapt to assist these consumers’ specific needs. By doing so, financial institutions can achieve further growth. Brown highlighted the importance of this with CUBroadcast: “As more Gen Zers show a preference toward being their own boss and economic difficulties force people to take extra steps to make ends meet, gig work is seeing a significant uptick. However, these side hustles often come with financial intricacies or limitations that go unnoticed until an issue arises, such as 1099s, lack of medical coverage, no retirement savings plans, etc. More banks and credit unions will determine where they can step in and support these gig workers, helping them embrace work the way they want while still carving out a strong financial future. This is another area where community banks and credit unions can forge lasting trust, especially with younger generations.” Whether gig workers are delivery drivers, freelance photographers, Airbnb hosts, or anything in between, they require unique support from their financial institutions. This is particularly crucial in areas where they may not have access to the typical benefits provided by more traditional roles.

Utilize Data and AI the Right Way

AI has become an unavoidable tool in most markets. However, to leverage it most effectively, it is paramount for businesses to ensure they have a set strategy and adequate resources in place. In an interview with Finovate, Wynn explained: “…when it comes to AI and, especially, generative AI, banks and credit unions should know that the technology is only as strong as the data and information behind it. There is a lot of work to train AI to make AI effective; it’s not a magic bullet. You must give it the right data and training to effectively work, while continuing to provide human oversight.”

As AI becomes even more common and impactful, institutions must identify how best to apply AI to your daily processes and systems.  “As the industry continues to buzz with the potential of artificial intelligence, and generative AI in particular, more concrete use cases will emerge this year. For example, AI has the power to optimize efficiencies and effectively organize, mine and analyze vast amounts of available data across the enterprise. Employees will not be replaced but augmented, empowered to spend more time and focus on growth-focused member advisory and strategic activities. While not all credit unions can and should implement generative AI right away, what's most important is defining an AI strategy based on their unique risk profile and member base,” Brown said in a guest editorial in Credit Union Times on the growing potential of AI.

Invest in success

While some of these themes may not be new to financial institutions, their implications may change along with a rapidly evolving market. By prioritizing a personalized experience and focusing on financial wellness, organizations can demonstrate that they are reliable and focused on consumer needs. Paying attention to trends such as the rise in gig work especially for the younger generations can help financial institutions invest in the right strategies for success. Lastly, AI may be the latest buzzword. but it is here to stay and it is vital for organizations to ensure they have a strategy for implementation. By devoting resources to these four themes, financial institutions will set themselves—and their customers and members—up for success.