Community banks should look for ways to make their digital banking experience stand out for consumers in the face of increasingly commoditized offerings.
Most community banks in the United States are focusing on enhancing the digital experience for their customers, making sure they offer most, if not all, of the features that the top five banks offer. However, most community banks are doing the exact same thing, creating digital banking experiences that look and feel eerily similar.
These banks are using the same technology, the same channels and the same process workflows. Outside of the bank’s branding, it can be difficult to tell what differentiates one digital bank from another.
While these similarities help ensure that customers don’t switch banks for one down the street, it’s not preparing institutions to hold their own against new competitors. Challenger banks like N26 and Chime are creating a new, different experience for users — and quickly taking over the market.
Creating a differentiated experience for users takes more than new features or an updated interface. It comes down to banks being able to build for the future with a platform that can be scaled and easily integrated — a platform built on APIs.
APIs, or application programming interfaces, provide the flexibility and customization that is often lacking in banking. APIs allow banks to work with a wider pool of partners to build a more-personalized experience at a fraction of the development cost. APIs have enabled three trends and transformations that allow for differentiated community banking: real-time payments, true any-channel offerings and personalized user experiences.
Real time transactions
JPMorgan Chase & Co. recently launched real-time payments, which allows customers to instantly execute provider payments. This move creates urgency for other large institutions to implement similar offerings. But delivering this real time experience could require some midsize banks to undergo a complete digital transformation and create a technical infrastructure that can support real-time interactions: one built with an API-first architecture.
Any-channel, or omni-channel, means delivering the same services across multiple channels. But true, any-channel technology should focus on a platform that allows institutions to adopt any-channel — regardless of what that looks like in the future — while maintaining a single experience.
With an API-first architecture, multiple channels don’t translate to redundant development work. Instead, banks can focus on iterating on the overarching experience and translating that to each separate channel. Any-channel becomes less of a never-ending goal and more of a strategic vision.
The Ideal User Experience
Consumers not only want the same experience across channels — they want a seamless experience. Banks using an API approach can build workflows and processes that update automatically, so that users who start an application online can finish that process in the branch, on their mobile app or over the phone. APIs allow banks to build an experience around the user, not the channel.
When banks focus on the user experience instead of the channel or feature, the options are endless. Any number of micro-services can be integrated into a custom experience that is specific to the bank’s audience.
Just Holding On, or Thriving?
Most banks do a great job at maintaining their online experiences in their current states: their clients won’t leave because their competitors offer the same digital experience. But when it comes to acquiring new customers, it’s a different story.
New, digital-only banks are quickly taking wallet-share from consumers with sleek and personalized user experiences. Only those banks using APIs will have the ability and agility to keep up with the competition.