It is no secret that financial institutions are preparing for a recession
. But while some institutions are bracing for the worst by curtailing spending, others continue to invest in technologies to strengthen their strategic competitiveness. They view an economic downturn as an opportunity to raise brand awareness and strength. Technological advancement in difficult times is an excellent strategy for existing account holder retention and new account holder acquisition. And more importantly, it can foster long-term loyalty.
The competitive nature of financial services is primarily not affected by economic downturns. Many fintechs will double down as they see an opportunity for exposure and growth. Traditional financial services providers should consider the same mindset. Let’s look at a few technologies that are prudent investments during this economic downturn.
- Open Banking- Digital banking provides consumers access to their account information but is not always a convenient and efficient process. For example, consumers with accounts at multiple providers often must log in to each provider’s digital banking solution to see their account information. Not only is this time-consuming (multiple logins, passwords, MFA challenges, etc.), it prohibits them from seeing a 360-degree view of their finances. Open Banking aggregates all that information creating a holistic view enabling consumers to manage all their relationships within one application. This is a more convenient and efficient process for accessing and managing their information. The financial providers chosen by consumers to utilize this functionality become critical and likely the preferred provider to manage their finances.
- Marketing Insights and Opportunities- Consumers are always looking for personalized opportunities to improve their financial position. While one-to-one marketing has been a hot topic in financial marketing circles for years, it has yet to be achieved until now. Traditional marketing campaigns often use outdated data because it is a historical snapshot of the account holder’s information before the beginning of the campaign. Alternatively, a marketing insights engine processes account holder data in real-time and presents one-to-one personalized offers to the consumer. Not only can the insights engine identify product acquisition opportunities such as loan refinancing, it can also promote advocacy by proactively warning account holders of potential costly events by trending transaction behavior.
- Real-Time Alerts and Notifications- Another way that consumers can prudently manage their finances is through real-time alerts and notifications. Consumers can create customized alerts to prevent costly events such as a low account balance that could result in returned items or missing an upcoming loan payment. They can also create notifications that alert them when their payroll or other income sources, such as social security, have been deposited. Real-time alerts and notifications monitor their accounts while they are busy with their day-to-day activities. Consumers are inundated with information on a daily basis. Real-time alerts and notifications cut through the noise and provide vital information for them to prudently manage their accounts.
Consumer Demand Is Not Swayed by Economic Conditions
Consumer demand for new products and services is not affected by financial conditions. Turbulent events such as a recession (or, dare we say, a pandemic) increase consumers’ interest in products and services that can assist them in managing their finances. The need to see a holistic view of their finances and maximize every opportunity to improve their financial condition is of utmost importance.
The products and services above assist consumers in managing and, in many cases, improving their financial condition. And, while awareness of these technologies may be heightened during economic turbulence, their usefulness to manage and improve consumers’ financial position is beneficial in any economic environment.
When to invest in technology solutions varies by organization, but the strategic goals of retaining and acquiring account holders do not. Economic downturns create opportunities for exposure, growth, and reinforcement of brand advocacy. And advocacy often leads to loyalty. Any technology that assists a financial institution in achieving that status regardless of economic conditions is money well invested.