Online Banking: Have It Your Way?
Americans like buying things their way. Think vanilla skinny latte with an extra shot of espresso and Build-A-Bear, not to mention a litany of downloadable apps that personalize smartphones.
As this customization revival of sorts deepens and thrives in America, it’s only a matter of time before consumers expect to be able to tailor every aspect of their lives, including their personal finances. What that means for online banking, then, is those eventual customer demands will make banks pony up for innovation. Consumers should be able to turn online banking features on and off as they wish, for example, as well as make online banking homepages visually the way they wish to see them. In other words, what online banking sites consumers are viewing should be what they want to look at — mostly.
Here — on Bank Innovation — there have been healthy discussions of folding PFM into online banking sites as a strategy to grant customers digital financial personalization, and in turn, make online banking sites a larger part of consumers’ lives. And already, a report indicates FIs are listening. Indeed, US banks are increasing their investments in the online channel, according to a report published last week by research firm Novarica LLC.
“Our research shows that consumers are becoming more multi-channel,” said Madhavi Mantha, principal and head of banking, in a statement. “In response, banks are increasingly taking a broader view of their online banking capabilities to better integrate traditionally siloed capabilities such as PFM, payments, etc., in order to deliver a more seamless experience to their customers.”
Beyond what banks are doing, our upcoming August online banking Bank Innovation Monitor also suggests that consumers have the desire to visit PFMs. Though only 11% of Americans said they had “ever visited” a PFM, fully 20% said they would like to do so. That’s the biggest “ever visited” –to–“interest in visiting” spread among the alternative banking sites that we queried in our survey. Though that expressed interest isn’t directly tied to online banking sites, the data certainly suggests consumers have a decent desire to use more robust financial tools online.
To be fair, there are a myriad of challenges for banks who wish to deploy PFM capabilities, which Bank Innovation members have vocalized in a variety of posts. Frank Rauscher wrote about one challenge below:
While Schwanhausser is correct that banks are in the “ideal spot,” the top 6 banks (which control half the money) could care less and the others may be ambivalent. It would mean that they would have to include “suitability” into their PFM programs. Yet, the ABA does not want “suitability” because the banks are too afraid of it. PFM would mean that the bank (if it had integrity and was trustworthy) would need to direct you to another financial institution (like Macy’s sending Xmas customers to Gimbals in the movie “Miracle on 42nd Street”) if their product would not be in your best interest or “suitable.”
And that’s just one argument. Others argue the big banks will never want to “help” consumers in avoiding fees by deploying PFM capabilities online. Despite these hurdles, I feel more positive about the future of the channel. Banks will help customers by offering personalized online banking sites because consumers will demand it of them. There’s something to be said about the power of the people: they’ll have it their way. Eventually.
