3 Must-Watch Trends for Financial Institutions in 2022

Eddie O'Leary author photo
Eddie O'Leary President and Founder

A rapidly changing marketplace has shifted every CMO’s focus toward optimizing their digital business. Fueled by technological advances and social distancing, customers depend on apps and websites to complete tasks once handled in person. To keep pace, companies need to evolve with consumer demands to stay competitive.

Amid so many changes, no industry has faced a more comprehensive transformation than finance. Advances in data storage and analytics have introduced more effective ways of understanding your customer and anticipating their needs. But for all the lofty results some platforms promise, your institution needs more than the right tools to be successful.

As you prepare your financial institution for an uncertain future, you need to stay aware of the latest developments in your ever-changing industry. 

After I moderated three discussions between banking leaders at the Future Digital Finance conference in Miami, three trends immediately stood out as topics to watch. If you want to stay competitive, the following developments should be on your radar.

1. Data Accessibility and Utilization Across Your Institution

Developments like cloud storage and big data established that your institution’s business information can be applied for a competitive advantage. Leverage your website to better understand your customer and their journey, and your institution builds greater trust with customers. Consequently, not only does your bank or credit union provide better service, you also boost retention rates for your business.

But in addition to ensuring your data is captured and available for analysis, you also have to ensure its accessibility. 

How Cross-Functional Data Teams Deliver a Competitive Advantage

Dedicated to helping customers build their credit, Mission Lane determines eligibility for their company’s services through a comprehensive view of data. Mission Lane uses interviews and contextual data to determine eligibility for their Visa cards for customers who may not otherwise receive a line of credit.

Initially, the company collected large amounts of consumer data in a slow and costly process. And rather than restricting access to the information, it created pods of specialized teams to develop its data projects. With data scientists collaborating with underwriters and other internal stakeholders, Mission Lane refined its application process much faster than its competitors.

Ensuring your institution has the right tools to analyze data is important, but it’s only half the battle. You can leverage your data as a competitive advantage by allowing internal teams to establish and test their hypotheses.

2. Identity Assurance Through Advances in User Authentication

Working in the financial industry, fraud remains a consistent—and even increasing—concern. Just as customers have grown more reliant on digital transactions, hackers and other bad actors have grown more sophisticated. Along with ensuring your data is secure, your institution also needs full assurance of your customer’s identity.

Our dependence on digital tools spurred by the pandemic has underscored the need for better user authentication. The financial sector has been leading the charge because the stakes are that much higher when fraud occurs. 

Institutions use KYC (Know Your Customer) standards in an effort to protect against fraud. But the FIDO Alliance aims to take authentication a step further. 

Biometrics and Second-Party Authentication Aim to Replace Passwords

At Future Digital Finance, a representative from Mastercard discussed ongoing developments in personal authentication in the financial industry. The credit card company is trying to break free from the vulnerabilities and complexities of user passwords by working with the FIDO.

Already adopted by employees at large companies such as Microsoft, Google, and Facebook, FIDO is at the forefront of the effort to authenticate users without passwords. Instead, FIDO advocates for two-factor authentication using a secondary device or physical details and behavior patterns called biometrics. Rather than relying on a customer’s input, biometrics allows you to confirm the user by recognizing their facial structure, voice, or other unique identifier.  

In a promising development for your institution, FIDO has partnered with the World Wide Web Consortium (W3C) to create an authentication API: WebAuthn. Instead of needing to create a costly application or partner with an outside vendor, your developers can simply use their API for user authentication. 

By incorporating WebAuthn, your institution gains a stronger, more cost-effective sense of security—especially as compared to the costs associated with fraud. In addition, your customers benefit from a more streamlined user experience that eliminates the stress of password recovery and blocked account access.

3. Targeting Commercial Customers (and Their Representatives) Through Data

User data is a critical tool for creating personalized journeys for customers browsing your institution’s website. We all already know that. But once you effectively determine what content draws a user’s interest, you can use that information to customize their digital experience to influence the results you need.

A marketing officer from Bank of America underscored the importance of applying the same principles to business owners during one of our discussions at the conference. At one level, you can look at user behavior in your app or website alongside transaction data to build a clearer understanding of how to better market your services. You may recognize a customer has browsed mortgage rates multiple times, but they haven’t yet contacted one of your bank’s representatives. You can tailor your next statement email to further promote the services that have attracted the customer’s interest.

But at the same time, you need to be aware when personalizing your messaging that your users may not always be the final decision-maker. For example, users could be browsing for services as a member of a company’s finance team, but the CEO will ultimately make the call. Your website needs to deliver information this audience needs to understand your institution, but also ensure these details are shareable and presented in a way that will appeal to an executive audience.

As you bring the different kinds of content on your site to the surface, you need to ensure it satisfies the needs of every kind of commercial user. Pages that demonstrate the value of your services should be engaging, informative, and shareable for every user reviewing details about your institution.

Financial Institutions Will Always Depend on Secure, Accurate Information

Whether your financial institution is a global brand or a regional credit union, your business depends on its digital experience remaining in tune with industry developments. Your website isn’t just a brochure for your services or a means to check an account balance. It’s a vital, always-on connection point with customers.

Keeping up with every new technology isn’t always feasible, especially if your bank isn’t a multinational conglomerate. However, by ensuring both your customers and your internal teams can securely access and act on the data they need, you can keep your business in step with the times.

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