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Banks Urged to Choose Convenience to Retain Customers

Banking customers will increasingly choose convenience over risk

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Banks Urged to Choose Convenience to Retain Customers

Banking customers will increasingly choose convenience over risk when it comes to payments, putting some bank business models at risk, a report has claimed.

The annual report from independent advisory firm Strategic Resource Management (SRM) warned that customer loyalty will wane if they encounter friction when completing transactions.

The report also suggested that, over the coming 12 months, banks and credit unions needed to focus on the growing embedded payments trend.

It said that, alongside the likes of Amazon and Starbucks, subscription-based services had a growing number of cards on file and banks would do well to offer more incentives to use debit cards in the embedded payment scenario.

President of SRM, Patrick Goodwin, said: “What we’re seeing now from working with financial institutions across North America and Europe is that the best-in-class are investing in flexible technologies, giving them deeper visibility to their data while enabling customers to play a greater role in self-service across all of their banking products.

“It has never been more important for banks and credit unions to know what’s negotiable – not only to enhance the capabilities in their operations, but also to thrive in a climate of constant change.”

In addition, the report found that many financial institutions remained unsure of where to go with their digital brand. Addressing this area with an approach that worked 10 years ago might not work in 2020, it added.

However, those who gamble with the branch as their only human touchpoint for consumers will lose their bets, the report said, suggesting that if many institutions are to survive margin compression through ways other than acquisition, they must find operational economies of scale.

Brad Downs, CEO of SRM, added: “Technological change continues to accelerate. Looking back over the last decade, the devices from 10 years ago seem primitive considering the digital tools we have today.

“In 2020, we see continued disruption – and opportunity – in all aspects of payments, digital, intelligent tech and data. Though there will be winners and losers, for those who want to survive and thrive, SRM is here to help adapt to these changes.”

The report highlighted that the death of cash in the US is not imminent, but that while the volume of cash is growing, cash usage is being outstripped by digital payments.

In order to protect from economic discrimination, some US states and cities have made it illegal for B2C businesses to ‘go cashless’.

This, the report warns, is an area that financial institutions must monitor, especially to defend the margins and market standing of cash-handling organisations.

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Webinar: Real-Time Payments in the U.S. Market

Time/Date: June 16, 2021 2:00 p.m. ET

The U.S. has come a long way in its journey to real-time payments, with TCH and Zelle in market and FedNow just around the corner. COVID-19 has accelerated that demand to move to real-time. Yet many financial institutions remain unconvinced of the need to move, with less than 3% of financial institutions signed up today.

In this Banking Exchange hosted webinar Celent’s Gareth Lodge, Senior Analyst, Global Payments, and Alacriti’s Mark Ranta, Payments Practice Lead, discuss the findings in the Celent research report, Real-Time Payments in the US Market: Speeding Up or Slowing Down? A Call to Arms.


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