While perusing my daily news stories related to financial services, I came across this article from The Financial Brand. It discussed a study concluding 58% of potential account switchers, including those already looking to move from their existing financial services provider, would consider an “alternative” provider like Apple, Facebook, Google, or Amazon. Not surprisingly, Millennials and Gen Z were more likely to consider a non-bank to provide banking services than Gen X or Baby Boomers. It seems the 58% was a blend of all demographics surveyed.
This insight is not surprising to me. In fact, I was only surprised the overall percentage was as low as 58%. Let’s break this down—someone is doing a survey and asks, “Would you consider Apple, Facebook, Google, or Amazon as a financial services provider?” If I were asked that question, I would say, “Yes, I would consider it.” Would I actually do it, though? That is a completely different matter. Like most people, I consider the online activity with Apple, Facebook, Google, or Amazon to be superior to virtually any online banking app. When you only consider the user experience, it’s understandable how people would compare an organization providing “Service X” to banking services. Too bad providing banking services is a lot harder than just developing a great app.
As the article illustrates, the issue is how people feel about their experience with their primary financial services provider. However, what few consider is there are numerous rules and regulations financial institutions must follow—all which make it hard to provide banking services the same way Amazon allows for consumer purchases. That is not to say banks and credit unions should be excused for offering less than an optimum user experience. There is clearly a UX gap between what most FIs offer as an online experience, and what they could be offering if an outstanding UX was the desired outcome. It’s likely you will see FIs upgrading their online services as core providers in the near future, like how Jack Henry upgraded to significantly enhanced online banking services (Banno).
Like I’ve said, if it was easy to create and operate an online bank, there would be a lot more of them. Even some of the high profile non-banks that attempted to offer online services, specifically targeting Millennials and Gen Z, couldn’t do it. You have to have a banking charter to provide banking services, or you can pretend you have banking services, but actually be working with a real bank behind the scenes. If you have the former, you are now subject to all of the compliance and regulations inherent in having a banking charter—that stifles the type of quick-pivot innovation which makes companies like Amazon desirable vendors. If you have the latter, there’s a built-in latency in the services you provide since you depend on a third party. One online non-bank financial service, no longer available, had an amazing UI and got a lot of press, but they had to process all their transactions through a bank. This meant you could capture a check on your mobile device, but the actual deposit might take three to five business days (their T&Cs stated it could be as many as seven). Think that went over well with their users?
Banks may be more aligned, but at the end of the day, they have a tough job: adhere to all the rules and regulations and provide an amazing user experience. It’s like I say, “Customers don’t have unrealistic expectations; they just want it to taste like chocolate, be non-fat, and free.” I welcome any non-bank to step up to the plate, follow all the rules banks and credit unions do, and be amazing at the customer experience. If they can achieve it, I would likely want to join. In the meantime, I’ll stick with my bank, Citizens Community Bank, located in Valdosta, GA. They offer a robust online presence, and I have the ability to walk in the bank and sit down to chat with the president, usually without an appointment. My customer experience is based on more than just their app; so Amazon, see if you can top my experience with CCB. If you can’t, maybe you should stay in your lane.