May 26, 2020

PayThink Tech firms have used payments to jump ahead of banks

For too long lately, especially when it comes to the topic of payments, the banking industry has been late to the proverbial digital innovation table.

As a result, non-traditional competitors such as Venmo and PayPal were able to enter the space and capitalized on this lack of innovation. In particular innovation centered around the payments processes and experiences.

Financial institutions and their technology providers should have taken the lead and introduced these processes and experiences to consumers beforehand. When easier, more convenient and innovative offerings emerged, consumers were left wondering why their own bank or credit union was not able to offer that same kind of consumer-focused experience and why they needed to go outside of their banking relationship to get it.

Whatever the reason may be for falling behind, the bottom line is financial institutions continue to run the risk of losing ground to fintech players that are challenging the status quo.

Community-focused banks and credit unions now more than ever are looking to shape the industry, rather than continually being shaped by it. They know they want to innovate, yet they have been left with the feeling that no one is listening or working to help them.

These financial institutions want a say in how products are put together and how they function to help better serve customers or members. They realize they need to innovate to remain competitive, however they have struggled because of the burden of legacy systems and technologies they carry.

Instead of them propelling change in the industry, these smaller FIs find themselves in a game of catch-up, which is only putting them at a further disadvantage. When their customers or members use another option outside of the FI, the relationship they have worked so hard to gain is further diminished.

Today’s consumers rightfully expect their bank or credit union to provide tools and services like those of other industries. Their innovative experiences with industries like retail, non-traditional financial tools, entertainment, and dining have shown them how they can expect to be served, especially in a digital format.

Companies like Amazon, Apple, PayPal Netflix, Uber and others have made it so easy to transact that consumers are left wondering why their bank or credit union cannot provide them with the same kind of seamless and tailored experiences.

Many financial institutions find themselves scrambling to remain relevant. This gap in financial services can be bridged when banks and credit unions team up with innovative and industry-focused technology vendors to better connect consumer expectations with the FI’s offerings.