The financial industry is gearing up for a transformation in 2024 amid a time of challenges. Growing cybersecurity and fraud concerns, the expansion and contraction of the industry itself, a battle for new deposits, the quest to attract the elusive Generation Z(Gen Z) and an uncertain economy. In the face of all of this, it’s hard for financial institutions to know exactly what to prioritize heading into next year.
What will that mean for 2024 budgets? According to Ron Shevlin, as stated in Alkami’s 2024 Strategies & Budgeting Playbook for Financial Institutions:
“Despite the overall pressure to reduce expenses, we’ll continue to see a rise in digital spend from high-performing financial institutions. In particular, 2024 will see a significant increase in focus and spending on machine learning as financial institutions experiment with Generative AI use cases and conversational AI tools as financial institutions deploy chatbots and intelligent, digital assistants to better support their members, customers, and employees.”
Where should banks and credit unions allocate budget dollars for the coming year to best position themselves to tackle these ongoing challenges? The focus should be owning the complete account holder experience digitally. Here are five priorities to consider.
1. Integrating data insights for digital sales and service
Insights gleaned from data aren’t “nice to have” anymore. They’re a necessity if small-to-mid-sized financial institutions hope to compete against not just giants like Wells Fargo but neobanks and fintechs as well.
Combining the traditional areas of customer service with the bank or credit union’s upsell and cross sell strategy into one digital banking platform creates a powerful revenue generating experience for account holders that can inspire loyalty. Using a digital banking platform for sales and service is a strategic step to achieve growth. How do you get started?
- Use data for personalization and relevancy as a standard practice
- Offer a fast and secure method for digitally opening new products
- Provide ways for account holders to instantly move or send money via P2P transactions and A2A transfers
- Provide opportunities for enhanced customer service and information about products that account holders want
2. Technology that delivers speed
“If it takes more than five minutes to open an account digitally, prospective customers are likely to abandon the effort.”
Consumers want the convenience of opening a new account online as well as transferring funds into that account instantly. In addition, money movement should be simple, secure and easily accessible on your institution’s mobile banking app.
Additionally, a marketing automation tool fed by data insights can support a financial institution’s marketing strategy by deploying new campaigns quickly and effectively, while providing end-to-end reporting to measure success in near real-time.
3. AI-powered solutions
The industry is far beyond using artificial intelligence (AI) just for chatbots.
Artificial intelligence has the ability to quickly and accurately analyze or take on repetitive tasks freeing up employees for more strategic assignments. This tool can support expediting completion of projects
2024 budget dollars should include artificial intelligence solutions to help with marketing automation, predictive audience modeling, powering personal financial management, as well as integrated natural chat support and search functions to create efficiencies and deliver around the clock intel to account holders.
4. Security and fraud solutions
Cyberhackers are becoming more sophisticated. But so are the tools financial institutions can use to detect and prevent instances of fraudulent activity. 2024 budget dollars should include security and fraud solutions for your financial institution and your account holders. Protecting automated clearing house (ACH) and other electronic payments, two-factor authentication and one-time passcodes are necessary. Focus on solutions for both retail and business banking.
5. Outreach to younger account holders
Winning the current battle for deposits means attracting and retaining younger account holders, such as Gen Z. Reaching this audience means providing a technology rich, high-quality user experience with the digital banking platform as the foundation, and then leaning on a shift in marketing mindset. Campaigns can include: venturing into areas such as targeted display and social media advertising, creating short videos about topics like saving in tough economic times and why it’s important to start contributing to a 401(k) early. This type of content should be aimed at educating younger account holders on the channels they use most.
2024 budget dollars should focus on enhancements to the digital experience, and marketing automation targeting younger account holders. It’s incumbent on financial institutions to grow deposits, and that means a strategic plan to reach these young people.
In the coming year, financial institutions need to embrace the power modern technology is bringing to this industry. Consumers demand it, not just in banking, but in every aspect of their lives.
For even more 2024 budgeting and strategies for financial institutions, download The 2024 Playbook here.