By Kathleen Craig
For years now, we’ve all heard the warnings that the end of days is coming for banks. So far, though, the “Amazon moment” in banking has not been right around the corner. That said, no one would deny that change is happening in our industry at a pace we have not yet seen.
Consumer and business expectations have changed. And these changes are raising the expectations of the way they want to interact with all companies they work with—which includes their bank.
And while it still seems unlikely that the Amazon moment is happening in banking (yet), there are very strong companies trying to chip away at pieces of your business a bit at a time.
Who are they?
If you do not yet know, you need to get up to speed. Just five years ago, the competitive audit for my own bank was divided into national, regional, community and credit union competitors.
That no longer works.
Today, there also has to be a column for fintech companies. While you may not see them in your market physically, they are there on social media and digital platforms. With hyper-targeted advertising, user adoption is growing every day by leaps and bounds—without physical locations.
- Personal Loans – Prosper and Upstart are making personal loans increasingly easy to apply for, obtain and manage with alternative credit data. In fact, Upstart has improved its model’s ability to identify creditworthy consumers. Its original model would have approved only 35 million Americans for a loan; its current model would approve more than 100 million.
- Consumer Deposits – SoFi, Chime, Digit and Qapital are working to grow their market share of consumer deposits. Earlier this year, Digit announced it had helped their customers save $500,000,000.
- Wealth Management – Companies like Robinhood, Betterment and Wealthfront are targeting your wealth management and investment services. Betterment has over $9.1 billion in assets under management. It took the firm less than eight years to build its portfolio to this size.
- Mortgage Lending – Quicken’s Rocket Mortgage is competing for your mortgage business. In early 2017, close to one year after Rocket Mortgage launched, it became the largest fintech lender, announcing it had funded $7 billion in total closed loans volume. In just 11 months Rocket Mortgage’s closed volume alone would already rank as a top-30 national mortgage lender, among the nearly 50,000 banks, credit unions, brokers and mortgage companies in the United States.
Are you actively using at least one of these fintech companies? Have you enrolled or applied for a loan?
What you don’t know could hurt you.
Business banking was an area where many banks thought they were safe. But do you realize there are companies actively targeting your small business customers on social media?
As a business owner, I am targeted daily by fintech firms like Kabbage, OnDeck, Fundera and others offering me business loans and other services on my LinkedIn and Facebook feeds.
Personally, you may not love social media. You may not want to apply for a loan online or through an app. But it is important to try it out anyway so that you understand exactly what your customers have access to.
As I pointed out in The Fear of Bankers Is Real, fintech companies have raised significant capital and are seeing adoption rates that require our attention.
Challenge yourself to change your mindset.
You’re no longer competing just with other banks and credit unions. Competitors are coming at you from all sides. You will need your entire team—from the front line to the board of directors—to stay alert, keeping your bank aware and ready to move forward to compete.
The fintech companies mentioned above are by no means a comprehensive list. So—if you have not already—take these quick and easy steps to start your journey toward fintech expertise.
- Survey your team (including your front line!). What fintech companies have advertised to them lately? What was the messaging? What are the ads?
- Survey your business customers. What fintech companies have advertised to them lately?
- Challenge your leadership team. Ask them to download and use a new fintech app every week. Try out all the different ones. Apply for loans you may not need to experience the workflow and ease of use.
- Use this knowledge to challenge your technology vendors. You’ll be in a much better position, then, to build your product and technology roadmaps.
Kathleen Craig is the Founder & CEO of HT Mobile Apps (HTMA). Kathleen has been in banking for over a decade, prior to founding her company she led consumer eServices leader at a community bank in Michigan. Kathleen’s specific focus in digital channel strategy gives her insight into the latest FinTech and banking trends. HTMA now serves community banks ranging from $30 million to over $15 billion in asset size over 16 states. Email: [email protected]. Twitter. LinkedIn.
Kathleen was a featured speaker at the ABA Bank Marketing Conference.