Going Digital to Strengthen Financial Relationships in the Subscription Economy

The banking industry has been changing rapidly as new regulations, technologies and customer expectations have continued to evolve.  Financial tech companies have been able to build innovative banking experiences that are competing directly with banks, so banks need to stay relevant in order to retain existing customers and attract new ones.  Simply put, to have a competitive edge and break through the financial clutter, they need to be able to offer compelling digital banking experiences.  

Artificial Intelligence is where it’s at

Cloud computing, faster internet and smartphones have made the banking experience more desirable and user-friendly.  FinTechs and Neo Banks have been able to leverage disruptive technology, such as AI, machine learning and big data to outperform traditional banks in building digital banking experiences.

How banks can stay relevant

Saving money is top-of-mind to most consumers.  In order to be the go-to place for saving money and managing finances, banks need to adapt to the new landscape:

Understanding the consumer

First and foremost, banks must pay attention to what their customers want and work to meet their needs.  According to a 2019 consumer study, people are extremely concerned about managing their personal finances.  They are generally dissatisfied with their financial health, as well as with their financial institutions.  38% of consumers and 50% of Millennials report they would have problems repaying a loan.  When asked what they want from their bank, 50% of consumers and 81% of Millennials reported wanting intelligent bank app features to help them manage everyday financial tasks quickly and easily.

Developing new solutions

Several studies indicate that customers are seeking digital solutions to their everyday financial problems.  Specifically, they want their bank app to be able to help them lead more healthy financial lives by:

• Telling them when payments are due
• Telling them how to avoid unnecessary expenses, such as unused subscriptions
• Helping them stay out of financial trouble
• Providing actionable advice on how to save money, reduce debt and improve overall finances
• Performing effortless transactions
• Keeping their money safe and secure

Embracing technology to provide best-in-class digital banking experiences 

Consumers expect much more from retail banks than they did in the past.  They want more than just basic banking services.  Adopting digital personal finance management (PFM) products will help banks become better partners.  Consumers want quick, easy and hassle-free solutions.  The new generation of AI offers a personalized, proactive and self-learning approach to help bank customers manage their finances more easily in areas such as cash flow, insurance, retirement planning, loans, expenses and investments.

Subscriptions are contributing to financial distress

Subscription services have disrupted nearly every category of consumer goods and service, for the better part of the past decade.  From music and movies to food and exercise, there is a subscription option for just about everything.  In fact, subscriptions are soon expected to represent the majority of bank customers’ expenses, which has huge implications in what PFM products banks should be offering.

The problem with subscriptions

While subscriptions are easy and convenient, there are downsides.  The more subscriptions a consumer has, the easier it is to lose track of them.  Most people don’t realize how much they are paying for subscriptions and whether they are using the service enough to make it a worthwhile expense.  According to a report from comparecards.com, 3 out of every 4 Americans have at least one online subscription (66% have more than one) and pay an average of $38/month:

• 58% pay for video services (like Netflix and Hulu)
• 41% pay for subscription shopping (like Amazon Prime)
• 34% subscribe to a music service (like Spotify)
• Millennials and Generation X spend more than Baby Boomers
• Interestingly, credit card debt is not a deterrent to subscribing, as 73% of consumers with $5,000+ in credit card debt pay for an online subscription

How banks can help manage subscription overload

Banks can help their customers manage the subscription madness by adopting an AI platform specifically designed to combat over-subscribing.  A simple app from ApexEdge, for example, allows banks to automatically alert their customers to subscriptions that are deemed unnecessary and then go a step further and offer to cancel them.  The customer simply needs to approve the transaction and ApexEdge handles the rest.

Despite the sprint towards digital banking, building and strengthening customer relationships cannot be understated.  Utilizing AI technology to assist clients with all aspects of their financial wellness will solidify the long-term bank/customer partnership and is essential to a bank’s survival.  

Sources: Minna Technology, prnewswire.com