Everything is at our fingertips, accessible instantly and from anywhere. From ordering groceries with a single tap to streaming our favorite shows on demand, convenience and speed are the new norm. Yet, when it comes to banking, traditional banks and credit unions are falling behind the curve. In this article, we'll refer to banks and credit unions as "financial institutions" in reference to both.
Consumers are changing, and their expectations are evolving rapidly. They crave fully-digital experiences, real-time capabilities, and tech-forward banking solutions that align with their needs. The days of a simple online banking experience are long gone – it's now the baseline expectation. But unfortunately, many traditional financial institutions haven't caught up.
As a result, we're witnessing a profound shift. Customers are flocking away from traditional financial institutions and credit unions at an astonishing volume. They're seeking out fintech companies and modernization-focused institutions that understand them and their current challenges.
So, what exactly are financial institutions and credit unions missing? Why are they struggling to meet the needs of today's consumers? Buckle up, because we're about to explore the specific pain points where traditional institutions fall short. From limited digital experiences to slow-moving processes, we'll delve into the very heart of the issue.
Product Over Consumer: Neglecting Customer-Centric Approach
Traditional financial institutions often prioritize their product lineup and outdated systems over truly understanding and meeting the diverse needs of their customers. They tend to stick to standard financial products without considering each client's specific financial situation or goals. But the truth is, every client has their own set of requirements and preferences when it comes to banking. One client might be all about having a wide range of account options that align with their unique financial objectives. Another might be seeking an embedded banking experience that seamlessly integrates with their business operations and offers a variety of convenient payment methods. And let's not forget those who value global payment and foreign exchange capabilities, or those who simply crave a fast, easy, and hassle-free digital banking experience for their personal finances. The bottom line is, cookie-cutter solutions just don't cut it anymore.
When clients feel like their bank doesn't “get” them or fails to support their needs, it's a recipe for dissatisfaction. That's why it's absolutely crucial for financial institutions to step up and truly understand what their clients need, both now and in the future. It's about going beyond the surface and offering tailored solutions that cater to each client's specific requirements. Clients deserve a banking partner who takes the time to comprehend their unique circumstances and aspirations. By adopting a customer-centric approach and customizing their offerings to individual clients, financial institutions can build stronger relationships and ensure higher levels of client satisfaction.
Mozrt CEO, Jeff Althaus, notes, "By putting the customer at the center of their strategies, financial institutions can enhance loyalty and attract new clients." This is why FIs partner with Mozrt to offer tailored solutions to their clients.
Lacking Digital Experiences: Falling Behind in Digital Innovation
In today's digital era, clients expect their banking experience to be seamless, intuitive, and accessible anytime, anywhere. They want their banking and payment needs to be at their fingertips, with the convenience of digital channels. However, traditional financial institutions are often struggling to keep up with these expectations, resulting in a digital experience disconnect. Clients desire API-focused and integrated solutions that allow them to connect their banking services with other platforms and applications seamlessly. They seek real-time payments that enable instant transfers and transactions, eliminating the delays associated with traditional methods. Moreover, clients value self-service solutions that empower them to manage their accounts, make transactions, and access information independently without relying on bank representatives.
Despite these clear demands, many financial institutions are still resisting full digitization. In part, because they are up against red tape and regulatory headaches themselves, but also because they’re unwilling to make a radical shift into the digital landscape. They continue to rely on outdated systems and processes that hinder the delivery of a modern and user-friendly digital experience. Cumbersome and complex onboarding procedures, clunky online platforms, and limited self-service capabilities are some of the challenges clients face when dealing with traditional FIs. This resistance to digitization not only frustrates clients but also limits financial institutions' ability to attract and retain customers in an increasingly digital landscape. To remain competitive, financial institutions must embrace the digital transformation, invest in user-friendly interfaces, and prioritize seamless online banking experiences that meet the evolving needs of their clients.
Inflexible Global Solutions: Limited International Banking Capabilities
In today's interconnected world, clients, especially business clients, are increasingly globally connected. They need fast, affordable, and efficient international banking services that facilitate cross-border transactions and foreign exchange. However, traditional financial institutions often fall short in this area, offering limited international banking capabilities that hinder clients' ability to conduct global business seamlessly.
Slow-moving and costly wire transfers that necessitate visits to the bank are no longer acceptable in the digital age. Clients have become accustomed to fintech-powered global payment platforms that allow them to send money across borders conveniently from the comfort of their homes.
While fintech companies excel in offering innovative and cost-effective global banking solutions, traditional financial institutions struggle to keep pace. They often lack the infrastructure, partnerships, and technological capabilities to offer the same level of efficiency and affordability in international banking services.
Clients need access to a wide range of international banking services, including foreign bank accounts, quick and secure international transfers, and robust foreign exchange solutions. By failing to provide these flexible and comprehensive global solutions, traditional financial institutions are falling behind their fintech counterparts and missing out on opportunities to serve the needs of globally connected clients.
Reliability and Downtime Issues: Unacceptable Service Disruptions and Outages
One of the fundamental expectations clients have from their financial institutions is reliability. They rely on their financial institutions to provide uninterrupted access to their accounts and financial services. However, traditional financial institutions often face challenges in delivering consistent and reliable services, leading to service disruptions and outages that frustrate and inconvenience clients.
Service disruptions and downtime can occur due to various reasons, including system failures, network issues, cybersecurity threats, or even scheduled maintenance. Regardless of the cause, these interruptions can have significant consequences for clients, such as the inability to access funds, make transactions, or manage their accounts.
Service outages can impact clients' trust and confidence in their financial institutions. They want to partner with institutions that prioritize the reliability and stability of their systems. The fintech industry has set high standards in this regard, with agile and tech-focused companies offering seamless and uninterrupted services. By addressing reliability and downtime issues, financial institutions can build trust, retain clients, and ensure a positive banking experience.
Cumbersome Onboarding Process: Impeding New Customer Acquisition
The onboarding process is often the first interaction clients have with their financial institutions, and it plays a crucial role in shaping their overall banking experience. However, traditional banks and credit unions frequently struggle with a cumbersome onboarding process that creates barriers for new customer acquisition.
Lengthy and complex onboarding procedures, such as paper-based forms, in-person visits, and manual verification processes, can deter potential clients from opening accounts or seeking financial services. Clients desire a streamlined and efficient onboarding experience that leverages technology and automation. They expect quick and hassle-free account opening, digital identity verification, and seamless integration with other financial platforms or services.
Fintech companies have emerged as leaders in providing frictionless onboarding experiences. They leverage digital solutions, such as eKYC (electronic Know Your Customer) processes, online document submission, and automated verification methods to simplify and expedite the onboarding journey. By contrast, traditional financial institutions that cling to outdated onboarding practices risk losing clients to more user-friendly and tech-forward competitors.
Slow Moving & Lacking Automation: Clunky Processes and Delays
In a fast-paced digital age, clients expect banking processes to be efficient, quick, and automated. However, traditional financial institutions often struggle with slow-moving and manual processes that result in delays, frustrations, and inefficiencies.
Tasks such as fund transfers, account updates, and transaction approvals often require clients to navigate complex procedures and endure unnecessary wait times. These sluggish processes can hinder clients' ability to manage their finances effectively, make timely decisions, or respond to changing circumstances promptly. Clients increasingly seek banking solutions that offer real-time updates, instant transactions, and automated workflows to simplify their financial interactions.
Automation is a key differentiator for fintech companies that prioritize speed and efficiency. Through advanced technologies, these companies streamline banking operations, automate routine tasks, and minimize human errors. This not only saves time for clients but also allows financial institutions to allocate resources more effectively and focus on providing personalized and value-added services.
Traditional financial institutions must adapt to the changing expectations of clients by embracing automation and digital solutions. Jeff Althaus emphasizes, "FIs must place convenience, speed, and flexibility at the forefront of their strategies to meet the expectations of today's clients."
Traditional financial institutions face various challenges in meeting the specific needs of modern clients. From neglecting customer-centric approaches to lacking digital innovation, cumbersome processes, and limited global capabilities, these institutions often fall short in delivering the seamless and personalized financial experiences that customers expect. Fintech companies like Mozrt, on the other hand, leverage advanced technologies, automation, and collaboration to provide tailored, user-friendly, and globally connected financial solutions.
Worried about falling behind? Let us help you step into the modern era of banking. Get in touch today.