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When you have the opportunity to ask some of the most interesting people in financial services and fintech about where the industry is headed, sometimes fascinating insights are revealed. We’ve built Moven’s One-to-One to showcase these influencers and their insights. In this installment, Moven’s Gregg Early sat down with Dave DeFazio of StrategyCorps to explore how digital services are disrupting the traditional relationship between banks and their customers, which means banks need to do more than just deliver online banking.
Where does StrategyCorps and its BaZing product fit into the new digital banking space?
In today’s digital environment, products are more important than ever because customers expect to find similar aspects of personalized service in their digital banking. That means, financial institutions need to meet customers where they are, now. They’re buying things differently now, so banks and credit unions need to add services to support customers’ digital consumer journeys and online lifestyles. Financial institutions need to get beyond the world of free checking and expand their features to include things like discounted mobile phone insurance, ID theft protection, discounts at local stores, and similar value added opportunities – without adding overdraft or minimum balance fees for them. You often speak of the “subscription economy”; what is that? Subscription-oriented business models have been around for a long time. In publishing we moved from physical newspapers to digital editions. And we’ve moved from Blockbuster rentals to Netflix subscriptions. As payments became more flexible, it was possible to allow consumers to pay for services on a weekly or monthly basis rather than an annual subscription. This akes pricing much more attractive and has attracted more subscription services rather than a la carte services.
There are three primary motivations for consumers in the financial services space: fee adverse, value buyers, and relationship buyers. Our research shows that value buyers make up about 30-50% of customers. If you can give them something for their money they are reliable customers. Build relationships into that and you have products that are valuable to a majority of customers or prospects.
What threats to bankers do you see coming from challengers such as Chime?
In 2020, 20% of new accounts were opened in digital banks. And not just challenger banks. A large number of digital natives (people in their 20s and 30s) were using big banks because they have built out their digital banking services. That is the challenge for smaller banks and credit unions – offering value and convenience not just to current and legacy customers, but creating a digital experience to bring in the younger generations. I like to ask financial institutions I’m working with, “What is your feature product for young people?” Many times, they don’t really have an answer. And a seamless, clear, valuable digital experience isn’t just for a younger demographic, it’s something that every customer wants.
How can bankers challenge the challengers?
Expanding on my previous answer, banks and credit unions need to make their features more innovative. And they need to figure out how to lure younger customers. For example, we built BaZing to provide customers with the products that they already have in their budgets but we offer them at discounts and add a level of community value by giving subscribers access to deals in local shops and restaurants as well as national chains.
The trick is to find features that are going to appeal to more than one demographic. Young or old, everyone loves a deal. You just have to make it easy
to deliver those deals.
Isn’t there something deeper than just “going digital” that banks need to understand?
Absolutely. It’s about how banks and credit unions manage the experience with customers and connect products to customers. But it’s also about working with employees to bring them along on this journey. Banking is still about relationships. Today, 40% of checking account holders are non-primary customers. Having a digital experience and team members that can build those into multi-account customers is a huge opportunity. And using the information banks get from their digital customers can help reinforce personal relationships through digital channels.
Through StrategyCorps’ proprietary analysis tools, industry-leading consumer research, and years of experience working with hundreds of financial institutions, our leadership team has the skills to deliver analytical and strategic insights and modern checking products to financial institutions looking to grow and expand relationships. With its white-label customizable capabilities, BaZing brings modern benefits to the checking experience that creates a powerful subscription pricing model and differentiates your product from your competitors, especially the megabanks.