As we forecast which trends will accelerate in 2018 for the industry, consumers will increasingly expect simplicity and convenience from their financial institutions.
However, consumers aren’t necessarily looking to do business specifically with “fintechs.” In the same way, we often assume that consumers have loyalty to a traditional financial institution or a credit union.
The reality is that in this age of nearly infinite resources and technology at our fingertips, consumers are simply looking for businesses that can meet their needs in a convenient and trustworthy manner.
With the growing importance of simple, fast, and convenient, here are a few trends to be aware of in 2018.
For years, the financial services industry has underserved the segment of consumers with little to no credit history, often referred to as “thin-file” consumers. These consumers historically have struggled to get approved for loans or improve their credit scores.
But we are seeing a growing number of nontraditional financial players using new data sets to clear these historic hurdles to meet the needs of these consumers and win their business.
We have already seen companies such as Square apply for bank charters to reach more customers, including new segments that have been underserved to date.
Targeted, personalized, and data-driven ads on Facebook and Google Maps connect with consumers more directly than ever before, pushing financial institutions like credit unions to explore new products and services that can build access to these thin-file clients through new channels and technology.
This will support the continuous increase of nontraditional players as the marketplace becomes more blurred between financial institutions, retail, and fintech.
Another emerging trend is the continued globalization of the currency markets. Specifically, we have recently seen an influx of companies addressing the pain of currency exchanges.
As we look ahead to 2018, credit unions should consider ways to make money transfers and exchanges simple for consumers. Frictionless payments and access to funds in any medium will continue to be a key consumer expectation in the future.
As we have seen in other industries, consumers increasingly will expect financial institutions to enable them to transact business whichever way they want, regardless of channel, location, or service.
Finally, the accelerated adoption of mobile payment platforms will continue through 2018 and beyond. Consumers expect frictionless buying experiences, regardless of where they are.
They want to control how, when, and where their payments are made, accessed, and stored.
Payment technology has moved beyond computers and mobile devices to voice-activated devices such as Amazon’s Alexa. With expanded payment access, this trend also brings evolving security concerns and a higher vigilance to payment security protection.
Credit unions must achieve a balance between exploring emerging payment technologies to meet member expectations and ensuring proper security measures are in place.
Plus, the increased adoption of artificial intelligence and voice-activated technology will continue to push the boundaries of nontraditional ways to connect with members. A year ago, it seemed far-fetched to open a bank account using voice-activated devices, but today financial players are starting to explore it.
What should credit unions do?
Credit unions must act when it comes to innovation while keeping their member at the center. It is important to keep an open mind to evolving trends, even though it can be easy to dismiss these ideas because they seem too far-fetched.
But as we have seen in many other industries, the organizations that continue to innovate and evolve will be in a better position to sustain and thrive.
“Alexa, please send my car payment today.”
BRIAN KAAS is managing director of CMFG Ventures, the venture entity of CUNA Mutual Group.