Every decade brings with it novel trends that redefine how banking works. Big Tech is taking a hands on approach to gaining economic power by spearheading new currencies such as Libra and swooping up Gen Z customers by using inventive marketing techniques. Private technology companies command a great amount of resources in today’s world. As major businesses accumulate an increasing percentage of wealth in the economy, they’ve shown a proficiency in leading complex efforts to heighten their financial standing. Companies like Amazon and Paypal lend billions of dollars a year to small businesses, for example. Big Tech has begun providing the same services that a bank does, which gives them the same lending power.
A Big Change In Customer Relationships
A stark change from previous banking strategies is the focus on communicating with customers. By using electronic communication, banks have upped their ability to interact with their customers through the use of alerts and payment deadlines. The platform that makes it possible to send all these messages varies from bank to bank, but more banks are utilizing software to get this job done. The possibilities of this development are nearly endless, from simple advertisements to notifying customers of fraudulent charges. Banks are becoming aware that a stronger line of communication with customers creates the opportunity to garner loyalty– and loyalty is something that all banks are yearning for as the economy becomes increasingly unstable.
Banks are also changing their game by partnering with fintechs. This is part of an effort by banks to secure their power in a changing economy. Even though private tech companies are widening their capabilities, banks are also gearing up to fight for the customer’s support. Data aggregators are an important tool for both sides as they try to find ways to be more efficient. An issue with these aggregators is that they are prone to cyberattacks. Competitors like PNC Bank have assured the public that their security it top-notch in efforts to assuage public sentiment. Banks that have in the past stuck to a specific line of services are expanding their capabilities in order to stay relevant to customers.
Technology and Software Driven Marketplace
Smaller banks that can’t create their own in-house AI systems or data aggregators are more likely to seek out third-party help in reaching any new standard that arises. This leads to a greater range of banks that can compete with the big players, but it also means that more legal issues will pop up. Gen Z is nearly of the age where its members can interact with banking systems, which means that they’re quickly becoming the most important demographic. Banks believe that the shift into a Gen Z world will dramatically change the banking system. This is because Gen Z customers have a stronger focus on mobile banking than any generation before. A Gen Z world will further push physical branches to become less important to companies.
There’s no doubt that the new entrants to the work force and banking system will want digital services to be the priority. Tens of billions of dollars can be saved by North American banks through the use of automated technology instead of human employees. While this does theoretically lead to a more efficient bank, it also means that many jobs will be eliminated from the economy. While many banks are simply cutting their workers without a thought to what that does to society, some other banks are devising ways to keep their employees and also maintain pace with competitors. OceanFirst Financial was able to retain most of its employees, although they had to learn a new set of skills in order to stay useful in changing market.