Global tides of change: the financial industry must adapt fast

As customers, we want our bank to be reliable, but that’s not the same thing as saying our expectation of banking is standing still.

Worldwide, customer expectations have changed repeatedly and frequently, and there’s no reason to think this is going to stop. The financial customer of the future will keep on changing!

So far, financial institutions haven’t been set up for this. This is one of the greatest mistakes that banks, and wealth management firms have made in the past – not preparing for the future. The insular and often elite levels of banking (including private banking, investment banking, and wealth management) have relied on doing business as usual – and not having any sort of strategy for change management.

While all other industries were digitalizing around them, they were very resistant to change, preferring to try and “dictate” to customers what they believe they wanted, without any freedom of choice. The result? A “one-size-fits-all” model which ended up fitting no one!

Choice and customisation

It is time for those who service financial customers to understand that they must provide a variety of user experiences, and do so in a totally customized manner. People just want what they want, the way they want, and when they want it: no difference for financial services customers.

In the industry, we should anticipate the changes by being agile, and convening with customers whenever possible to obtain input and feedback as to the types of banking, wealth management services that they require, and especially how they want them delivered.

New generations

Are Gen-Zs going to be harder to satisfy than Millennials? I do think that each generation has its own quirks and want services that are different from previous generations. But “harder to satisfy” doesn’t need to have a negative spin: for financial services institutions it means a huge opportunity to win over the clients of the future.

It comes back to choice again: financial institutions need to pivot their thinking to understand that personal choice is the way to create sticky relationships with future clients. The standards of user experience are being set by brands that Gen-Z and Millennials know and love – like Facebook, Amazon, Netflix, Google and others.

This is not just a comparison but a matter of direct competition: big tech firms are coming for this market! Traditional financial services firms must work hard to create new brand experiences and connections with future generations who will soon be able to find banking and wealth management services through the biggest tech firms instead of traditional financial institutions.

International competition

Big tech is not the only major source of competition: financial institutions need to be aware of the rapid advance made by brands like Alibaba and Tencent in the East.

China is now emerging as a leader in fintech, payments, innovation and infrastructure: in all these areas, their consumer tech brands are certainly areas of impact and growth and, thus, influence. The high degree of digitalization, mobile adoption (more than 2.5 devices per person) and almost universal use of messaging platforms like WeChat and Weibo make China a model for rapid innovation and creation of new markets.

I believe that an Asian style “messaging as a platform” is an extremely compelling innovation, as there is a greatly reduced the cost of new client acquisition when adding services like wealth management to existing uses like account information and payments.

Don’t forget cryptocurrencies

Cryptocurrencies will actually go mainstream for payments but the questions are: will it be bitcoin, and what will the timeline be for mainstream adoption? Today, we see mobile payments like Venmo and PayPal mimicking “digital currency” as no paper actually changes hands.

I think that bitcoin or another cryptocurrency will become widely accepted as a form of payments and especially cross-border, within the next five years. The question for financial institutions is – will you interpret this as a threat or an opportunity?

Follow April Rudin on Twitter @TheRudinGroup and click the author link for more information.

Read more strategic insights in our new collaborative white paper on Competition, Disruption, and Opportunity: Consumer Banking in 2019-2020

About the author

Founder and President of The Rudin Group, April J. Rudin is widely acknowledged as a top marketing strategist for the financial-services and wealth-management sectors.