Not all banks are created equal
For decades, traditional banks have dominated by appealing to a wide audience with accessible brick-and-mortar branches and uniform financial products – but today, this mass market approach to banking is no longer effective.
Digital banks are setting themselves apart from the incumbents
Small and mid-market businesses (SMBs) in particular don’t see their needs reflected in the standard banking model, which fails to provide digital tools like touchless payments, virtual cards and cash management services that are vital to business operations.
For true digital banks, however, these tools are just the beginning. Digital banks are transforming financial services by using artificial intelligence (AI) and data and analytics to create a suite of products that better serve businesses operating in today’s marketplace.
While digital banks have certainly set themselves apart from the incumbents, not all of these new entrants are created equal, and recent digital exits have highlighted the importance of partnering with a quality bank that can provide essential digital tools while catering to customer needs.
Here are three ways that digital banks are setting themselves apart:
1. Personalisation
A personalised banking experience is critical to most businesses, and for good reason. Tailored services allow businesses to make informed financial decisions, craft effective strategies and better respond to market changes. According to research from Forrester, 86% of companies said that personalisation is important to their business strategy. Quality digital banks eschew the one-size-fits-all model of traditional banking in favour of products and tools that can adapt to each businesses’ unique needs.
Personalisation should resonate throughout the banking journey through a blend of digital-first solutions and an inclusive customer experience. This includes access to trained banking professionals that can advise on business strategy and support the long-term financial well-being of customers, as well as programmes like Banking-as-a-Service (BaaS) and virtual cards that help businesses manage and generate revenue.
Personalisation is becoming the cornerstone of the banking industry. Boston Consulting Group (BCG) estimates that banks fostering personalised experiences will realise substantial revenue growth and competitive advantage.
2. Support
For years, traditional banks have touted one major benefit over digital banking: they offer convenient local branches and customer service – but in-person banking is going the way of the buggy whip. Businesses are now accustomed to operating in a digital landscape. According to research from BCG, in the US, banking branch visits are down 12% and ATM visits are down 5%.
While banking services have gone virtual, customer service and support has not. Customers are empowered by technology to control their banking experience, but research from Capco found that 63% of customers still want the option for one-on-one interaction. However, when chat-bots won’t suffice, digital banks frequently offer a personal conversation either over the phone or online.
Digital banks provide the support that customers need in the unique way that they need it, with financial experts and customer service representatives on hand to respond to questions and concerns along with a fully digital experience. This client-centric hybrid model helps to foster and support businesses and respond to customer needs.
3. Security
Financial safety is a top concern for prospective digital banking customers. In fact, research from Capco found that 75% of banking customers are concerned about fraudulent activity, particularly in online banking. For many, the longevity of incumbent banks elicits a sense of security, but although digital banks are new to the financial services sector, they offer unparalleled protection.
Technology has enhanced security in the banking system through the use of multiple authentication protocols, transaction verification of both parties and counterparties, frictionless payments and tokenisation and data shields, including firewalls and encryption, that serve to protect customer information.
These new technologies not only amplify security and safeguard against fraudulent activity, they also eliminate friction and common pain points to create a seamless customer experience. For SMBs, this balance is critical. Businesses rely on optimal security in both data and accounts without impeding the banking experience.
Just over a decade ago, mega banks were considered too big to fail. Today, the BCG says that they are too slow to survive.
The digital age is here, and SMBs must have access to a wide range of tools that create valuable efficiencies without foregoing essential standards, like support and security. Digital banks are meeting the moment, delivering more inclusive business practices while ushering in a new age in banking.
