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financial services Archives - POPi/o

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How Financial Institutions Can Stay Relevant Despite the Threat of Embedded Banking

By | Blog, Digital Communications, Video Banking

Embedded finance and Banking as a Service (BaaS) are rapidly reshaping the financial services industry—and have the potential to reshape other industries as well. Banks and credit unions face the increasing threat of financial services being offered by non-banking companies. The Financial Brand writes that “telcos, big techs and software companies, car manufacturers, insurance providers, and logistics firms” are all preparing to launch financial services to serve both businesses and consumers.

This changing landscape threatens banks and credit unions because it holds the potential to eat away at their market share. When non-financial companies are offering services like digital wallets, payments, lending, and bank accounts, legacy financial institutions (FIs) are put at risk of losing crucial business. But what can banks and credit unions do to stop it? How can they maintain their business despite the trend? In this blog, we’ll discuss the growing embedded finance and BaaS movements, and what FIs can do to maintain their market share.

The Developing Trend

Similar to movements like open banking, embedded finance—or embedded banking—is a relatively recent development. With the growth of e-commerce in recent years, people are adapting to new, digitized buying practices. In some cases, financial products, like financing, payments, digital wallets, and more are being built into other products and services and sold to businesses and consumers by non-financial companies.

Researchers looking into embedded finance consistently report that it’s expected to grow substantially in coming years. According to Dealroom.co, the total embedded finance market value is projected to hit $7.2 trillion by 2030. “Embedded finance and BaaS startups have already attracted huge funding in the last year,” the article says.

Companies venturing into embedded finance often have the goal of creating a more comprehensive customer experience. In their own research on the topic, McKinsey wrote that “Companies’ embrace of embedded finance…aims to retain customers and increase their so-called lifetime value.” By becoming a bigger part of their customers’ lives, these brands aim to increase the value of the products and services they provide. “For customers, the appeal is ease of use: a small business can get a bank account from its accounting software, or a consumer can pay via the retailer,” McKinsey wrote. 

How FI’s Fight Back

As The Financial Brand points out, most banks and credit unions are not prepared to compete in this new world of embedded finance. To survive, many financial institutions are partnering with fintechs to remain competitive. But banks and credit unions can still stay in the fight by making sure they have the ability to complete revenue-generating services outside the branch. 

The essential aspect of embedded banking that gives it an edge over legacy financial institutions is that it offers simplicity and comes built in to existing products and services. If financial institutions worked to make the delivery of their products more convenient, they might face less competition from embedded banking. Fewer people might be interested in applying for a loan with a non-financial company if they could just as conveniently apply for that loan at the financial institution they’ve entrusted with their money for the last ten years.

With the right technology, processes like opening and funding accounts, applying for loans, and other revenue-generating services can be easily completed digitally. It’s for reasons like these that so many POPi/o engagements end in document signing events. 

If you’re interested in learning more about how you can implement a Digital Communications Platform capable of delivering all your most important services outside the branch, Let’s Talk!

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Hitting a Moving Target: How to Meet Consumers’ Rising Digital Expectations

By | Blog, Digital Communications, Video Banking

The financial institutions that succeed are often defined by a never-ending mission to enhance their Customer Experience (CX). The people leading these organizations know that the rapidly evolving digital landscape is constantly raising the bar for consumer expectations. And with new metrics for measuring success and an increasing willingness for consumers to share information, there is an almost endless opportunity for CX improvement, including personalized experiences, targeted offers, visual engagement, conversational AI, and a host of other digital communications tools.

In the financial services industry, more than 70% of companies are undergoing a CX transformation, with 39.7% of institutions having a project completed or in-progress, and 30.9% planning a project by the end of 2022.

In a study by Metrigy, business metrics were evaluated before and after CX transformations. They based the transformations on four major categories: conversational AI, visual engagement, workforce engagement management, and self-service knowledge management. By tracking the impact these efforts had on customer ratings, revenue, operating expenses, and agent productivity, Metrigy determined that the CX solutions which resulted in the highest average improvement was visual engagement. This category includes video, cobrowsing, screen sharing, and other interactive tools.

According to The Financial Brand, “Consumers have grown accustomed to interacting with video and other visual means in their personal and professional lives.” They went on to say that banks and credit unions “are catching on and increasingly extending video to their customers.” They went on to say that the most efficient way to do this is by integrating their call center and Digital Communications Platform. This allows representatives on web chat to send video links to prospective customers, providing a seamless transition to a more comprehensive level of care.

When CX leaders were asked what benefits their video implementation provided, they provided six core reasons:

  • Video makes interactions more efficient to solve issues faster (50%)
  • Video improves customer relationships with more personal interactions (49.2%)
  • The pandemic made everyone used to using video (45.9%)
  • Customers were asking for it (40%)
  • Interactions required agents or customers to see something (36%)
  • Agents wanted to use it (36%)

Video is also exceedingly cost effective when comparing its capabilities to traditional alternatives. By leveraging services through these convenient channels, financial institutions can operate outside their service area without the added expense of expanding their physical branch network.

And because the financial services industry has a high average number of agents working from home (54.7%) compared to the average (47.2%), implementation of Digital Communications Platforms that facilitate remote work have become routine across the industry. Along the way, it’s important to use data to make sure the tools being implemented are having the desired effect. Using analytics and surveys to better dial-in the customer experience, successful financial institutions will evolve to meet the changing needs of consumers.

It can seem overwhelming, but it doesn’t need to be. We recommend starting simple, implementing the most vital digital solution for the needs your institution has and growing engagement from there. To learn more about how you can get started with your own Digital Communications Platform, click here