Traditional financial institutions losing primary account status to digital banks
Consumers and businesses have settled into new digital banking patterns that are disrupting the primary financial status of legacy banks and credit unions, impacting growth and longstanding relationships. To respond, financial institutions must consider new targeting and product development alternatives that may include a national footprint.
One of the major impacts of the pandemic is the increased comfort level consumers have with digital interactions and the decreased reliance on bank branches. This has significantly impacted the array of financial institutions a consumer will consider when they want a financial solution, and where they are opening new accounts. The result is a dramatic increase in the number of consumers who have their primary banking account at a fintech and/or big tech organization.
To respond to this shift in banking loyalties, traditional financial institutions must decrease their reliance on branch footprint, and consider a much broader digital account acquisition strategy to generate new deposit, loan and payments growth. For organizations smaller than the largest megabanks, there will also be the need to target specific customer segments at scale, building differentiated offerings.
Wake-Up Call for Traditional Banks
Financial institutions are realizing that the increase in digital banking use is not a temporary phenomenon caused by the pandemic, but a seismic and permanent shift in the way consumers and businesses conduct daily banking. This shift is impacting the way customer experiences must be enhanced and relationship engagement increased.
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