As regional and community financial institutions (FIs) work to meet digital users’ expectations and stay competitive among megabanks and fintechs, user experience (UX) becomes a focal point. With so much on the line, how do FIs succeed in delivering the most important part of the user relationship—the digital banking experience?
To answer the question, in June 2021, Alkami conducted primary research among 795 digital banking customers and members in the United States to better understand their expectations when it comes to an exemplary user experience and compared those findings with the perceptions of 150 regional and community financial institutions aspiring to deliver the same. The importance of user experience is not lost on the regional and community FIs in the study. In this blog, we’ll examine FIs’ perspective on the role of UX in the industry and how it determines the future of their business.
FIs care about UX
We asked bank and credit union decision makers to identify the most important attributes of a digital banking platform provider. They ranked user experience near the top in a list of twelve.
In evaluating the importance of eleven attributes in an online or mobile digital banking service, these basic elements come through as essential: reliability, security, and real-time syncing of data. Last on the list of importance is having a visually appealing aesthetic.
To better understand what users most expect in their ideal digital banking experience, we asked FIs to select their preference on a sliding scale across multiple areas, including:
FI decision makers answered these same questions in terms of what their bank or credit union would prefer to offer. Their responses show consumers and their FIs are not always aligned on what an ideal digital banking experience is. There are significant differences with consumers more likely to prefer:
When asked to evaluate their institution’s improvement in delivering more relevant product recommendations to consumers over the past year, 74 percent of decision makers in the study indicated their FI had at least become a “little more” relevant. Unfortunately, their consumers disagree, with less than 30 percent indicating the same.
Neobanks are addressing unmet needs for greater personalization. More than 50 percent of neobank customers agree that their FI’s product recommendations have at least become a “little more” relevant in the past year.
Big Tech eyes digital banking solutions
With neobanks setting a new standard for a highly personalized digital banking experience, the bar is likely to move higher still with Big Tech companies entering the fray. The threat is imminent, as perceived by regional FIs.
When asked to identify the greatest threat to their FI over the next 18 months, the “changing technology landscape” ranked higher among these decision makers than low interest rates, cyberthreats, uncertain regulations, and half a dozen other concerns.
Just over 50 percent of banks and credit unions agreed the “bank” of the future is more likely to be a technology company rather than a financial services company (39 percent of consumers cited the same). Despite FIs’ acute awareness of the imminent threat posed by Big Tech and fintech alternatives, most decision makers also say the “local bank or credit union down the street” is their primary competitor.
There’s the conundrum for regional and community financial institutions. While the local bank or credit union may certainly be a concern, neobanks are already delivering to a higher standard of personalization, and Big Tech entrants will only push consumer expectations further.
However urgent things seem now, FIs cannot underestimate the value of the trusted relationship earned over time. “Competitor” institutions are more likely to be seen as positive contributors to society (compared to megabanks or neobanks). The key to truly being competitive lies in unlocking a digital banking experience that is designed with the user’s outcomes in mind—increasingly more personalized and timely in nature—and that utilizes technology that empowers, rather than exploits, the consumers who depend on it.