10 Banking Trends for 2016 | US News

Things are changing in the banking industry. Some banks are ahead of the curve, most still try to continue using the old banking business model, but adding in some updates. So what’s ahead for banking? U.S. News spoke to four financial and banking experts, and here are 10 trends they said to watch for in 2016:

  1. Fewer people will head to branches. The number of people going to branches has decreased. According to one analyst, four in ten Americans haven’t visited a branch in the last six months, which is higher than 18 months earlier. Watch the number continue to rise as more people do their banking online, on their phone, or at ATMs.
  2. The digital and branch experience will merge. Banks are looking for more ways to integrate banking on a phone with banking in a branch. Banks will start to connect the digital experience. For example, you may start an application online, realize you need help, and then finish it at the branch.
  3. Branches will start to go digital. Some branches are already doing this by giving tellers tablets so they can meet with customers informally in the lobby or in private offices instead of at the counter. Other branches are installing self-serve kiosks or video ATMS connected to a remote teller.
  4. Investment options at the bank aren’t likely to expand. But that isn’t necessarily the right move for banks. For example, according to one expert, HSAs are growing rapidly, yet only 2,300 of the nations 12,000 banks and credit unions offer HSA options.
  5. Savings account interest rates should go up, but you won’t get rich. Even though the Federal Reserve raised interest rates, savings accounts are not tied to the prime rate. However, rates still may have a modest increase.
  6. Banks could start charging for convenience. Because of pressure to keep fees down, banks have to find other ways to make money. So be on the lookout for new fees for convenience services, such as remote check deposits and expedited payments.
  7. Online banking will remain popular but won’t replace branches. Even though less and less people visit bank branches, visiting a teller remains the most common way for people to access their account. Online-only banks have less fees and may become more popular, but they won’t replace the branches completely.
  8. Mobile payments will continue to make in-roads. Even though you see ads about the benefits of Apple Pay or Android Pay, not many people use them yet. Part of the reason is that retailers have been a little slow to sign on. However, this may be the year it becomes more common and smaller companies start to accept mobile payments now that more big merchants are doing so.
  9. Regional banks will get in on mobile deposits. Large, national banks have had the ability to remote deposit checks for a few years. But in the next 12 months expect more regional banks and large credit unions give their customers the ability to snap a photo of a check and instantly deposit it.
  10. Chip cards may finally see some action. There was a lot of hullabaloo about banks switching over to chip cards last year, but you probably haven’t used your new card much at the checkout. That’s because some merchants may not have the right payment terminals. Watch for merchants to update their systems and be prepared to start inserting your card into a terminal rather than swiping it.

For the full article from U.S. News, click here.

Community Banks Have Unique Opportunities

Opportunity Abounds for Community Banks

It is an interesting time for community banks. While they haven’t taken as big of a hit to their reputations as the larger national banks over the past five years, many have been unable to slog themselves out of the “mushy middle.” To see the entire Gallup report, click here.

 

Competition for Checking Is Heating Up Again…

By now, this offer should be familiar to everyone in our business–“Switch to Bank X and Get $300!”

Banks, particularly the larger players are pulling out the stops with offers of $300, $400, even $500 for moving. What are these banks looking for? Customer relationships–checking, savings and a loan relationship. Some of the offers are targeted at new checking customers and offer large bonuses for opening and funding a premium account. Others are going after relationships offering bonus money for various account types. All have activity and funding requirements, but know this–these offers work.

StratAgree recommends that regional and community banks do two things. First, they must understand the value of customer relationships to know how much is reasonable to spend to acquire them. Second, they need to ensure that their digital banking offerings (particularly mobile banking) are current and attractive.

Customer Value
Banks need to know which account types customers buy, what the average balances in those accounts are and the length of time customers keep these accounts open to begin to understand the value of a customer relationship. Many a marketer has been criticized for high cost per account acquired but few of the criticizers have solid evidence for why they believe it’s “too much.” Better marketing decisions are possible when you know the real value of a customer relationship

Digital Tech
The bigger banks are investing in state-of-the-art mobile banking platforms. Smaller players are beginning to lose share on this alone. Get current. Again, customer relationships are probably worth more than you think. Marketing isn’t the only investment required to attract and retain them.

Here’s a great piece that appeared at bankdirector.com about 6 weeks ago. Although it’s a similar story, we don’t see this as a new trend–it’s always been good business. It’s just that some players have better information to guide their strategy.  Chase has been using this tactic for many years with great effect. They know what a customer is worth. Do you?

 


 

To learn more about Customer Lifetime Value, contact Alpine Jennings at 716-713-4266 or

Robert Dorn at 404-987-2419.

 

Women Stuck Managing Home Finances

Women, more often than not are the CFO of their household. Our friends at The Financial Brand have compiled research from Regions Bank, Allianz and other sources showing that women feel like financial management of the household ends up being their responsibility in spite of their feeling less confident in financial matters compared to men.

44% of women said they are solely responsible for making financial decisions for their household, compared to 35% of men. However, men rated their overall confidence in handling finances higher (6.20 on a seven-point confidence scale) than women (only 5.86). Women under age 50 rated their confidence even lower (5.61).

The largest confidence gap between women and men is in the area of investing, where women respondents showed a confidence level of 4.75 on a seven-point scale compared to 5.42 for men. For the entire article click here.

Younger Consumers Ditching TV

Millennials are dropping cable after leaving their parents’ home.  The trend appears to be related to lower incomes of younger consumers. A new Nielsen report, (covered by the New York Times, see link below) shows the trend is likely to reverse as these younger consumers start families.

smartphone-982563_640For us, the takeaway is that 1 in 4 consumers ages 18-24 without children are foregoing cable TV. According to the research, these consumers are using an antenna or the internet for TV.

For consumers under the age of 32, at least half of their TV watching is on computers, tablets or smartphones.

Not surprisingly, this growing trend underscores the necessity for advertisers to build their presence in digital media.

The entire text of the NYT article can be found here.

Citi Testing Screenless, Cardless ATMs

Diebold has created an ATM that is screenless and doesn’t use ATM cards. How does it work, you ask? You use your smartphone!

Using your smartphone you preschedule pickups of cash. When you get near the ATM it identifies you by the near field communication (NFC) chip on your phone. And then confirms your identity through other means, like an eye scan.

This new ATM is being shown at a trade show this week in Las Vegas and Citi has begun testing them in a few areas. However, it could be years before an ATM like this becomes the standard. Several banks have been trying to develop and test cardless ATMs for years. But so far none have done a large-scale test of such a machine.

Yet someday a screenless, cardless ATM may become the norm.

For the full article from Consumerist, and a picture of what one of these ATMs look like, click here.