During American Banker’s Digital Banking conference in Austin, Texas, last month, Q2 HQ hosted a number of special guests, one of whom was Jim Marous, co-publisher of The Financial Brand, owner and CEO of the Digital Bank Report, and host of the Banking Transform podcast.
Having Jim in the office was a privilege, and one our team did not want to take for granted. So, our Chief Marketing Officer, Carlos Carvajal, sat down with him for a 30-minute “fireside chat,” where they discussed everything from the need for personalization in banking to changing consumer expectations; from prepping for a potential recession to what’s next in digital banking.
Here’s what Jim Marous had to say about …
Personalization
Jim: Personalization today goes beyond simply the name on the communication. It goes, are you showing me that you know me, understand me, and will reward me? Are you showing me in any communication or any engagement that you really understand where my mind is at and that you can help me?
… So, the definition of what personalization means has changed, and the expectation has changed. A lot of it, I think, comes out of COVID, because in COVID we got to understand how good Instacart could do on delivering groceries the way I want them delivered or what I wanted to watch in media with Netflix or Hulu or Amazon and how they prompt me based on what I've already done to what I may want to do in the future.
… You're going to save me time, you're going to save me money, and you're going to show interest in what my goals are—not just yours. I don't want to be able to peel back the layers just a little bit and realize it's just about efficiency. Today, we have to show the customer that what we're collecting on you, what we're processing on your behalf is going to make your life easier from a time, money, and engagement perspective, and most importantly, are you going to be able to show empathy towards my goals?
Segmentation
Jim: We can't be everything to everybody. We tend to want to do that as financial institutions because that's how we build our legacy. The reality is there are pockets of opportunity. I'd say, even more than SMB, maybe it's all accountants, maybe it's all startups, maybe it's all those organizations that are using technology in new ways, maybe it's gamers. How can I find the solution from a sub-segment of the marketplace that I can serve better than everybody else?
… We no longer have the luxury of trying to build something that's going to serve the biggest breadth to customers. We've got to find ways we can serve a smaller segment, but all of it.
Customer Loyalty
Jim: It's not the opening of the account that's going to make it so that I become a valuable customer. How much are you going to be able to provide me on an ongoing basis to make me a loyal customer? Our loyalty, by the way, in the banking world, has gone down tremendously. Just look around. How many accounts has every one of the people watching today's interview opened in the last two years that are financial related, that aren't with their traditional financial institution?
… I'll say that most financial institutions believe just because we haven't lost accounts, we have loyalty. When really, we don't have loyalty because almost every one of our customers has opened accounts at other institutions, so they've diversified their holdings, almost like an open banking relationship. While my current accounts may have not changed, my loyalty to you as a partner, as a provider has gone way down.
Digital Expectations
Jim: If you look at the different demographic groups and their use of digital, it's no longer a good definition saying, "It's just the younger people that are using digital." You really have to look and say, "I want to find those people in all demographic groups that feel digitally ready, digitally astute, or digitally laggard and I have to talk to them differently." So, the matrix of what we're talking about in personalization has never been more defined by diversity than it has been today.
Today’s Challenges
Jim: I've been fortunate that I've met about 200 different bankers in last year, face to face, one on one. I've asked them, "What is your biggest challenge today?" Invariably, almost across the board, they've said, "Getting today done." Today's moving so quickly that just keeping up—not going ahead, not getting better—is becoming more difficult. As a result, more than ever, financial institutions of all sizes have to find partnerships that are going to allow them to get to market in speed and at scale.
… If I was to prioritize, if I was to be back in banking or working for a financial institution, I’d say number one priority is fix your digital account opening, your digital loan application process, and your digital onboarding. Why? Number one, I can bring an early return on investment. We've done research, and the average amount of time to open an account by financial institutions globally is around 15 to 17 minutes. I don't know about you. I can't be on a mobile device that long for any purpose.
… We've seen about a 60% to 70% attrition rate on digital account opening processes where people abandon the shopping cart. If I can fix that and I can increase my account opening by 50%, 40%, 60%, I can more than pay for any engagement I have with Q2 or any partner out there.
What’s Next in Digital Banking
Jim: I think a lot of what's next is embedded banking and platform banking. I talked earlier about the fact that we have a lot of people that are building their own financial relationship around a lot of different services. Let's say Acorn, SoFi, Robinhood, LendingTree, whatever it may be, how can we bring this under one roof and be the holder of that key?
Jim has much more to say in the full video. Check out the fireside chat recording, here. And, download Jim Marous’ latest report, Digital Banking Transformation Strategies to Withstand Recession.
