Banks and financial institutions have always worked hard to make sure they are top of wallet when a customer reaches for a debit or credit card to make a payment. Now, with advances in mobile and digital technology changing the ways we pay for things, being top of wallet isn’t enough anymore.
In today’s digital world, banks need to focus on how they can be ‘top of phone’ among their customers.
Digital is the primary way consumers connect with their bank. The recent FIS Performance Against Customer Expectations (PACE) report found across all demographics, 73 percent of U.S. consumer interactions with their bank are digital. And it’s not just the younger generation driving this trend. Baby boomers (ages 52-71) made 72 percent of their transactions with their primary bank through mobile or online channels over a 30-day period.
As consumers continue to navigate today’s digital vortex, the onus is on banks and financial institutions to provide customers with innovative new ways to manage their money on the go, seamlessly and safely.
The digital age is redefining payments
Smartphones have replaced many accessories for most people: camera, calculator, flashlight. And now, as the digital age continues to grow, smartphones are also replacing our wallets.
PACE data shows mobile payments – from shopping to person-to-person (P2P) money movement – had the strongest growth of any payment type from 2016 to 2017. P2P payment transactions alone saw a 47 percent increase in the U.S. last year, and that number is expected to keep rising.
As payments shift from plastic and paper to digital, banks must fight to become the dominant P2P provider for their customers.
P2P is essential to becoming ‘top of phone’
The explosion into digital banking has created more responsibility for banks to provide their customers with the support and technology they need to manage their money and their transactions online.
According to the Federal Reserve, 80 percent of mobile banking activity revolves around checking balances and facilitating transactions, which provides an opportunity for banks and financial institutions. Offering mobile payment capabilities will position banks to fight for market share from third-party payment providers, such as PayPal and Venmo.
PACE data shows that banking customers would prefer to use mobile payments such as P2P through their banks because of the implied security of managing their financial portfolio exclusively through their financial institution. In fact, the importance for a primary bank to provide digital payment options has risen significantly year-over-year. So much so, not offering them will soon be an Achilles heel for banks.
Over a 30-day period, more than 30 percent of young millennials (ages 18-25) and 17 percent of senior millennials (26-35) used a payment service’s app – not their financial institution - to make a P2P transaction. This shows that customers, especially younger demographics, are just as likely or more to use an outside app for P2P payments as they are their financial institution.
As payments shift to mobile and cashless, banks must fight to become ‘top of phone’ among their customers, establishing a stronger multiple service relationship that cannot be easily dislodged by competitors.
Banking in the digital age
The key to sustainable growth begins with your customers and the way they want to bank – digitally.
For banks to stay competitive in this digital shift, the time is now to embrace the technologies that make banking easier for customers.
Providing up-to-date digital payments options, including mobile wallets and P2P, is an absolute must for banks to gain ‘top of phone’ status. It also provides more ways to engage with customers, deepening the relationship between banks and their customers. It’s a win-win-win.